Question

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown below

Date		Transaction	Number of Units	Per Unit	Total
Apr.	3	Inventory	25	$1,200	$30,000
	8	Purchase	75	1,240	93,000
	11	Sale	40	2,000	80,000
	30	Sale	30	2,000	60,000
May	8	Purchase	60	1,260	75,600
	10	Sale	50	2,000	100,000
	19	Sale	20	2,000	40,000
	28	Purchase	80	1,260	100,800
June	5	Sale	40	2,250	90,000
	16	Sale	25	2,250	56,250
	21	Purchase	35	1,264	44,240
	28	Sale	44	2,250	99,000

	Instructions
1.	Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the first-in, first-out method The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred. and the periodic inventory system.
2.	Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the last-in, first-out method The method of inventory costing based on the assumption that the cost of merchandise sold is the cost of the most recent purchases. and the periodic inventory system.
3.	Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the weighted average cost method The method of inventory costing in which a weighted average unit cost for each item is computed each time a purchase is made. and the periodic inventory system. Round the weighted average unit cost to the dollar.
4.	Compare the gross profit and June 30, 2016, inventories.

none

X

FIFO

1. Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the first-in, first-out method

The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.

and the periodic inventory system.

Merchandise inventory, June 30, 2016
Cost of merchandise sold

Points:

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none

X

LIFO

2. Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the last-in, first-out method

The method of inventory costing based on the assumption that the cost of merchandise sold is the cost of the most recent purchases.

and the periodic inventory system.

Merchandise inventory, June 30, 2016
Cost of merchandise sold

Points:

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none

X

Weighted Average Cost Method

3. Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the weighted average cost method

The method of inventory costing in which a weighted average unit cost for each item is computed each time a purchase is made.

and the periodic inventory system. Round the weighted average unit cost to the dollar.

Merchandise inventory, June 30, 2016
Cost of merchandise sold

Points:

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Final Question

4. Compare the gross profit and June 30, 2016, inventories using the following column headings:

Question not attempted.

1		FIFO	LIFO	Weighted Average
2	Sales
3	Cost of merchandise sold
4	Gross profit
5
6	Inventory, June 30, 2016

Solution

1		FIFO	LIFO	Weighted Average
2	Sales
3	Cost of merchandise sold
4	Gross profit
5
6	Inventory, June 30, 2016

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Answer 1

Periodic inventory system:

Units available for sale:

April 3 25 units * $1200 = $30000

8 75 units * $1240 = $93000

May 8 60 units * $1260 = $75600

28 80 units * $1260 = $100800

June 21 35 units * $1264 = $44240

275 units $343640

FIFO:

Cost of goods sold:

April 11 25 units * $1200 $30000

15 units * $1240 $18600

30 30 units * $1240 $37200

May 10 30 units * $1240 $37200

20 units * $1260 $25200

19 20 units * $1260 $25200

June 5 20 units * $1260 $25200

20 units * $1260 $25200

16 25 units * $1260 $31500

28 35 units * $1260 $44100

9 units * $1264 $11376

$310776

Ending inventory:

26 units * $1264 = $32864.

LIFO:

Cost of goods sold:

April 11 40 units * $1240 = $49600

30 30 units * $1240 = $37200

May 10 50 units * $1260 = $63000

19 10 units * $1260 = $12600

5 units * $1240 = $6200

5 units * $1200 = $6000

June 5 40 units * $1260 = $50400

16 25 units * $1260 = $31500

28 35 units * $1264 = $44240

9 units * $1260 = $11340

$312080

Ending inventory:

April 3 20 units * $1200 = $24000

May 28 6 units * $1260 = $7560

$31560

Weighted average method:

Weighted average per unit = $343640 / 275 units

= $1249.6

Cost of goods sold :

249 units * $1249.6 = $311150.4

Ending inventory:

26 units * $1249.6 = $32489.6

	FIFO	LIFO	WEIGHTED AVERAGE METHOD
Sales	$525250	$525250	$525250
Cost of goods sold	$310776	$312080	$311150.4
Gross profit	$214474	$213170	$214099.6
Ending inventory	$32864	$31560	$32489.6.