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Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the...

Pete’s Tennis Shop has the following transactions related to its top-selling Wilson tennis racket for the month of August. Pete’s Tennis Shop uses a periodic inventory system.

Date Transactions Units Unit Cost Total Cost
August 1 Beginning inventory 8 $ 145 $ 1,160
August 4 Sale ($150 each) 5
August 11 Purchase 10 135 1,350
August 13 Sale ($165 each) 8
August 20 Purchase 10 125 1,250
August 26 Sale ($175 each) 11
August 29 Purchase 12 115 1,380
$ 5,140

For the specific identification method, the August 4 sale consists of rackets from beginning inventory, the August 13 sale consists of rackets from the August 11 purchase, and the August 26 sale consists of one racket from beginning inventory and 10 rackets from the August 20 purchase.

5. Calculate sales revenue and gross profit under each of the four methods. (Round weighted-average cost amounts to 2 decimal places.)

6. Comparing FIFO and LIFO, which one provides the more meaningful measure of ending inventory?

7. If Pete’s chooses to report inventory using LIFO, record the LIFO adjustment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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Pete’s Tennis Shop
Answer 1
Periodic Specific Identification No. of Units Cost per unit Total
Beginning Inventory               8.00            145.00      1,160.00
Purchased on Aug 11            10.00            135.00      1,350.00
Purchased on Aug 20            10.00            125.00      1,250.00
Purchased on Aug 29            12.00            115.00      1,380.00
Goods available for sale            40.00     5,140.00
Cost of Goods sold
From Beginning Inventory               6.00            145.00         870.00
From units Purchased Aug 11               8.00            135.00      1,080.00
From units Purchased on Aug 20            10.00            125.00      1,250.00
Total Cost of Goods sold            24.00     3,200.00
Ending Inventory            16.00     1,940.00
Answer 2
Periodic FIFO No. of Units Cost per unit Total
Beginning Inventory               8.00            145.00      1,160.00
Purchased on Aug 11            10.00            135.00      1,350.00
Purchased on Aug 20            10.00            125.00      1,250.00
Purchased on Aug 29            12.00            115.00      1,380.00
Goods available for sale            40.00     5,140.00
Cost of Goods sold
From Beginning Inventory               8.00            145.00      1,160.00
From units Purchased Aug 11            10.00            135.00      1,350.00
From units Purchased on Aug 20               6.00            125.00         750.00
Total Cost of Goods sold            24.00     3,260.00
Ending Inventory            16.00     1,880.00
Answer 3
Periodic LIFO No. of Units Cost per unit Total
Beginning Inventory               8.00            145.00      1,160.00
Purchased on Aug 11            10.00            135.00      1,350.00
Purchased on Aug 20            10.00            125.00      1,250.00
Purchased on Aug 29            12.00            115.00      1,380.00
Goods available for sale            40.00     5,140.00
Cost of Goods sold
From units Purchased on Aug 29            12.00            115.00      1,380.00
From units Purchased on Aug 20            10.00            125.00      1,250.00
From units Purchased on Aug 11               2.00            135.00         270.00
Total Cost of Goods sold            24.00     2,900.00
Ending Inventory            16.00     2,240.00
Answer 4
Periodic Weighted Average No. of Units Cost per unit Total
Beginning Inventory               8.00            145.00      1,160.00
Purchased on Aug 11            10.00            135.00      1,350.00
Purchased on Aug 20            10.00            125.00      1,250.00
Purchased on Aug 29            12.00            115.00      1,380.00
Goods available for sale            40.00            128.50     5,140.00
Cost of Goods sold            24.00     3,084.00
Ending Inventory            16.00     2,056.00
Workings for Answer 5
Calculation of sales value No. of Units Sell Price Total
Aug 4               5.00            150.00         750.00
Aug 13               8.00            165.00      1,320.00
Aug 26            11.00            175.00      1,925.00
Total            24.00     3,995.00
Answer 5 Specific FIFO LIFO Weighted Average
Sales       3,995.00        3,995.00      3,995.00                       3,995.00
Less: Cost of goods sold       3,200.00

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