Question

Periodic Inventory by Three Methods

The beginning inventory at Midnight Supplies and data on purchases and sales for a three-month period ending March 31, are as follows:

Date		Transaction	Number of Units		Per Unit		Total
Jan. 1		Inventory	7,500		$75.00		$562,500
10		Purchase	22,500		85.00		1,912,500
28		Sale	11,250		150.00		1,687,500
30		Sale	3,750		150.00		562,500
Feb. 5		Sale	1,500		150.00		225,000
10		Purchase	54,000		87.50		4,725,000
16		Sale	27,000		160.00		4,320,000
28		Sale	25,500		160.00		4,080,000
Mar. 5		Purchase	45,000		89.50		4,027,500
14		Sale	30,000		160.00		4,800,000
25		Purchase	7,500		90.00		675,000
30		Sale	26,250		160.00		4,200,000

Required:

1. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

2. Determine the inventory on March 31 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

3. Determine the inventory on March 31 and the cost of merchandise sold for the three month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent and final answers to the nearest dollar.

Merchandise inventory, March 31	$
Cost of merchandise sold	$

4. Compare the gross profit and the March 31 inventories, using the following column headings. Enter all amounts as positive numbers.

	FIFO	LIFO	Weighted Average
Sales	$	$	$
Cost of merchandise sold
Gross profit	$	$	$
Inventory, March 31	$	$	$

Answer 1

1)
	Merchandise inventory, March 31			$           10,10,625
	Cost of merchandise sold			$       1,08,91,875
2)
	Merchandise inventory, March 31			$             8,81,250
	Cost of merchandise sold			$       1,10,21,250
3)
	Merchandise inventory, March 31			$             9,80,975
	Cost of merchandise sold			$       1,09,21,525
4)				FIFO	LIFO	Weighted Average
	Sales			$       1,98,75,000	$       1,98,75,000	$       1,98,75,000
	Cost of goods sold			$       1,08,91,875	$       1,10,21,250	$       1,09,21,525
	Gross Profit			$           89,83,125	$           88,53,750	$           89,53,475
	Inventory, March 31			$           10,10,625	$             8,81,250	$             9,80,975
Workings:
Date	Transaction	Number of units	per unit	Total		Date	Transaction	Number of units	per unit	Total
Jan 1	Inventory	7,500	$    75.00	$             5,62,500		Jan 28	Sale	11,250	$ 150.00	$       16,87,500
10	Purchase	22,500	$    85.00	$           19,12,500		30	Sale	3,750	$ 150.00	$          5,62,500
Feb 10	Purchase	54,000	$    87.50	$           47,25,000		Feb 5	Sale	1,500	$ 150.00	$          2,25,000
Mar. 5	Purchase	45,000	$    89.50	$           40,27,500		16	Sale	27,000	$ 160.00	$       43,20,000
25	Purchase	7,500	$    90.00	$             6,75,000		28	Sale	25,500	$ 160.00	$       40,80,000
						Mar. 14	Sale	30,000	$ 160.00	$       48,00,000
Total		1,36,500		$       1,19,02,500		30	Sale	26,250	$ 160.00	$       42,00,000
							Total	1,25,250		$    1,98,75,000
Total units available for sale				1,36,500
Total Units sold				1,25,250
Total Ending Units				11,250
FIFO stands for first in first out.It means inventory which is bought first is sold first.
Costs of Ending Inventory will be calculated as follows:
Date	Transaction	Number of units	per unit	Total
Mar 25	Purchase	7,500	$    90.00	$             6,75,000
Mar 5	Purchase	3,750	$    89.50	$             3,35,625
	Total	11,250		$           10,10,625
Now,
cost of goods available for sale				$       1,19,02,500
Costs of Ending Inventory				$           10,10,625
Costs of goods sold				$       1,08,91,875
LIFO stands for last in first out.In this case, inventory which is bought last is sold first.
So, Costs of ending inventory will be as follows:
Jan 1	Inventory	7,500	$    75.00	$             5,62,500
10	Purchase	3,750	$    85.00	$             3,18,750
	Total	11,250		$             8,81,250
Now,
cost of goods available for sale				$       1,19,02,500
Costs of Ending Inventory				$             8,81,250
Costs of goods sold				$       1,10,21,250
Weighted Average cost			=	$       1,19,02,500	/	1,36,500	=	$                   87.20
Now,
cost of goods available for sale				$       1,19,02,500
Costs of Ending Inventory				$             9,80,975
(11250*$ 87.20)
Costs of goods sold				$       1,09,21,525
Now,
				FIFO	LIFO	Weighted Average
	Sales			$       1,98,75,000	$       1,98,75,000	$       1,98,75,000
	Cost of goods sold			$       1,08,91,875	$       1,10,21,250	$       1,09,21,525
	Gross Profit			$           89,83,125	$           88,53,750	$           89,53,475
	Inventory, March 31			$           10,10,625	$             8,81,250	$             9,80,975