Question

Three identical units of merchandise were purchased during July, as follows:

Date	Product T	Units	Cost
July 3	Purchase	1	$25
10	Purchase	1	28
24	Purchase	1	31
	Total	3	$84
	Average cost per unit		$28

Assume one unit sells on July 28 for $40.

Determine the gross profit, cost of goods sold, and ending inventory on July 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) average cost flow methods.

	Gross Profit		Cost of Goods Sold		Ending Inventory
a. First-in, first-out	$fill in the blank 1		$fill in the blank 2		$fill in the blank 3
b. Last-in, first-out	$fill in the blank 4		$fill in the blank 5		$fill in the blank 6
c. Average	$fill in the blank 7		$fill in the blank 8		$fill in the blank 9

Answer 1

FIFO METHDO
		COST OF GOODS AVAILABLE FOR SALE	COST OF GOODS SOLD	CLOSING STOCK
Date	Particulars	Units	Cost Per unit	Total	Units	Cost Per unit	Cost of Goods Sold	Units	Cost Per unit	Ending inventory
July.03	Purchases	1	$             25.00	$                        25	1	$         25.00	$                   25
July.10	Purchases	1	$             28.00	$                        28				1	$         28.00	$                   28
July.24	Purchases	1	$             31.00	$                        31				1	$         31.00	$                   31
	Total Goods Available For sale	3		$                        84	1		$                   25	2		$                   59
LIFO METHDO
		COST OF GOODS AVAILABLE FOR SALE	COST OF GOODS SOLD	CLOSING STOCK
Date	Particulars	Units	Cost Per unit	Total	Units	Cost Per unit	Cost of Goods Sold	Units	Cost Per unit	Ending inventory
July.03	Purchases	1	$             25.00	$                        25				1	$         25.00	$                   25
July.10	Purchases	1	$             28.00	$                        28				1	$         28.00	$                   28
July.24	Purchases	1	$             31.00	$                        31	1	$         31.00	$                   31
	Total Goods Available For sale	3		$                        84	1		$                   31	2		$                   53
Average Cost Method
		COST OF GOODS AVAILABLE FOR SALE	COST OF GOODS SOLD	CLOSING STOCK
Date	Particulars	Units	Cost Per unit	Total	Units	Cost Per unit	Cost of Goods Sold	Units	Cost Per unit	Ending inventory
July.03	Purchases	1	$             25.00	$                        25
July.10	Purchases	1	$             28.00	$                        28
July.24	Purchases	1	$             31.00	$                        31
	Total Goods Available For sale	3	28.00	$                        84	1	28.00	$                   28	2	28.00	$                   56
Solution:		FIFO	LIFO	Average Cost
	Sales	$                      40	$                   40	$                        40
	Cost of Goods Sold:	$                      25	$                   31	$28
	Gross Profit	$                      15	$                      9	$                        12
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