Question

Part II
The following table is inventory history of AAA.
		# of units	Price per Unit	Total Cost
Dec 1	Beginning Inventory	100	$                             12	1,200
Dec 3	Purchase	200	$                             13	2,600
Dec 4	Purchase	300	$                             14	4,200
Dec 20	Purchase	400	$                             15	6,000
Dec 25	Purchase	500	$                             16	8,000
Total		1,500		22,000
During December, AAA sold 700 units at $30
How much is the Cost of Goods Available for Sale?
$            22,000	(100 x 12) + (200 x 13) + (300 x14 ) + (400 x 15) + (500 x 16)
	1,200 +2,600 + 4,200 + 6,000 + 8,000
How much is the net sale?
$            19,000			20,500   1,5000
Complete the following table
In this table, you have to calculate Cost of Goods Sold and Ending Inventory under LIFO, FIFO, Weighted Average method
For weighted average method, round up the average cost per unit to the two decimal points
Suppose that your income tax rate is 27% of your income before income tax.
		FIFO	LIFO	W. Average
Net Sales		$       12,720.00
Cost of Goods Sold		$          8,280.00
Gross Profit		$          4,440.00
Operating Expense		100.00	100.00	100.00
Income From Operation
Other gain		100.00	100.00	100.00
Income Before Income Tax
Income Tax
Net Income

Answer 1

Formula sheet

A	B	C	D	E	F	G	H	I
2
3		Date	Trasactions	Units	Costs per unit	Total Cost
4		43435	Beginning Inventory	100	12	=E4*F4
5		43437	Purchase	200	13	=E5*F5
6		43438	Purchase	300	14	=E6*F6
7		43454	Purchase	400	15	=E7*F7
8		43459	Purchase	500	16	=E8*F8
9
10			Cost of goods available for Sale	=SUM(E4:E8)		=SUM(G4:G8)
11
12		Hence Cost of goods available for sale is	=G10
13
14
15		Units Sold	700
16		Selling Price	30
17		Net Sales	=D15*D16	=D15*D16
18
19		Hence Net Sales is	=D17
20
21		Calculation of Cost of Goods Sold and Ending Inventory:
22
23		Using LIFO Method:
24		In LIFO method invetory that is purchased last is sold first and older inventory is used after that.
25
26		Total Units sold	=D15
27
28		LIFO Periodic
29			Units	Cost per unit	Total
30		Beginning Inventory	=$E$4	=$F$4	=D30*E30
31		Purchases
32		=C5	=E5	=F5	=D32*E32
33		=C6	=E6	=F6	=D33*E33
34		=C7	=E7	=F7	=D34*E34
35		=C8	=E8	=F8	=D35*E35
36		Total purchases	=SUM(D32:D35)		=SUM(F32:F35)
37		Cost of Goods Available for sale	=D30+D36		=F30+F36
38		Cost of Goods Sold
39		Units from Dec 25 Purchase	=D35	=E35	=D39*E39
40		Units from Dec 20 Purchase	=D26-D39	=E34	=D40*E40
41		Total Cost of Goods Sold	=SUM(D39:D40)		=SUM(F39:F40)
42		Ending Inventory	=D37-D41		=F37-F41
43
44		Weighted average method
45		Weighted average method assumed that goods available for sale are homogeneous.
46		Average cost is found by dividing cost of goods available for sales with number of units available for sale.
47
48		Average cost	=G10/E10
49		Total units sold	=D15
50		LIFO Periodic
51			Units	Cost per unit	Total
52		Beginning Inventory	=$E$4	=$F$4	=D52*E52
53		Purchases
54		Cost of Goods Available for sale	=D37		=F37
55		Cost of Goods Sold	=D49	=D48	=D55*E55
56		Ending Inventory	=D54-D55		=F54-F55
57
58		FIFO method:
59		In FIFO method invetory that is purchased first is sold first and newer inventory is sold after that.
60
61		Total Units sold	=D15
62
63		FIFO Periodic
64			Units	Cost per unit	Total
65		Beginning Inventory	=$E$4	=$F$4	=D65*E65
66		Purchases
67		=C5	=E5	=F5	=D67*E67
68		=C6	=E6	=F6	=D68*E68
69		=C7	=E7	=F7	=D69*E69
70		=C8	=E8	=F8	=D70*E70
71		Total purchases	=SUM(D67:D70)		=SUM(F67:F70)
72		Cost of Goods Available for sale	=D65+D71		=F65+F71
73		Cost of Goods Sold
74		Units from Beginning Inventory	=D65	=E65	=D74*E74
75		Units from 3 Dec Purchase	=D67	=E67	=D75*E75
76		Units from 4 Dec Purchase	=D68	=E68	=D76*E76
77		Units from 20 Dec Purchase	=D61-SUM(D74:D76)	=E69	=D77*E77
78		Total Cost of Goods Sold	=SUM(D74:D77)		=SUM(F74:F77)
79		Ending Inventory	=D72-D78		=F72-F78
80
81			FIFO	LIFO	Wt. Average
82		Net Sale	=$D$19	=$D$19	=$D$19
83		Cost of goods sold	=F78	=F41	=F55
84		Gross Profit	=D82-D83	=E82-E83	=F82-F83
85		Operating Expense	100	100	100
86		Income From Operations	=D84-D85	=E84-E85	=F84-F85
87		Other Gain	100	101	102
88		Income before tax	=D86+D87	=E86+E87	=F86+F87
89		Income Tax	=D88*27%	=E88*27%	=F88*27%
90		Net Income	=D88-D89	=E88-E89	=F88-F89
91