Question

Camo SurplusCamo Surplus

began

JulyJuly

20162016

with

7070

tents that cost

?$1010

each. During the? month,

Camo SurplusCamo Surplus

made the following purchases at? cost:

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?(Click the icon to view the? purchases.)

Camo SurplusCamo Surplus

sold

240240

?tents, and at

JulyJuly

?31, the ending inventory consists of

6060

tents. The sale price of each tent was

$ 55$55.

Requirements

1.	Determine the cost of goods sold and ending inventory amounts for JulyJuly under the average? cost, FIFO? cost, and LIFO cost. Round average cost per unit to two decimal? places, and round all other amounts to the nearest dollar.
2.	Explain why cost of goods sold is highest under LIFO. Be specific.
3.	Prepare the Camo SurplusCamo Surplus income statement for JulyJuly. Report gross profit. Operating expenses totaled $ 2 comma 750$2,750. Camo SurplusCamo Surplus uses average costing for inventory. The income tax rate is 3636?%.

Requirement 1. Determine the cost of goods sold and ending inventory amounts for

JulyJuly

under the average? cost, FIFO? cost, and LIFO cost. Round average cost per unit to two decimal? places, and round all other amounts to the nearest dollar.

July	6		80 tents	@	$15	=	$1,200
		18		100 tents	@	$24	=	2,400
		26		50 tents	@	$28	=	1,400

Answer 1

Date	Particulars		Units	Rate Per unit($)		Amount
	Opening Stock		70	10		700
July 6th	Purchases		80	15		1200
July 18th	"		100	24		2400
July 26th	"		50	28		1400
	Total		300			5700
	Cost of Goods Sold and Ending Inventory
1	Average Cost(Simple Average)
		Cost Per Unit		19
				Units	Avg Cost		Total Cost
		Cost of Goods Sold		240	19		4560
		Closing Inventory		60	19		1140
2	First in First Out(FIFO)
				Units	Rate per unit		Total Amount
		Cost of Goods sold
			Opening	70	10		700
			"july 6th	80	15		1200
			"july 18th	90	24		2160
			Total	240			4060
		Closing Inventory
			"july 18th	10	24		240
			"july 26th	50	28		1400
			Total	60			1640
3	Last In first Out (LIFO)
				Units	Rate per unit		Total Amount
		Cost of Goods Sold		Total Units Sold 240
			"jul 26th	50	28		1400
			"jul 18th	100	24		2400
			"jul 6th	80	15		1200
			Opening	10	10		100
			Total	240			5100
		Closing Inventory
			Opening	60	10		600
4	Income Statement Under Average Cost Method
						Amount($)
			Sales	(240*$55)		13200
		Less:	CGS	(240*$19)		4560
			Operating Expenses			2750
			Net Profit Before Tax			5890
		Less:	Income Tax @36%			2120.4
			PAT			3770
5	Closing Stock Inventory Under Lifo Is less when compared to FIFO,and Average due to the Purchase price of Tents have increasing trend due to which the cost of Iventory under LIFO is low,Because under LIFO Latest Stock Is used First then Stock purchased earlier at lesser price will be in Stock.