Question

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

		Magnesium XP	Units	Cost
May 3		Purchase	1	$130
10		Purchase	1	136
19		Purchase	1	142
Total			3	$408

Assume that two units are sold on May 23 for $313. Determine the gross profit for May and ending inventory on May 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

	Gross Profit	Ending Inventory
a. First-in, first-out (FIFO)	$	$
b. Last-in, first-out (LIFO)	$	$
c. Average cost	$	$

Answer 1

	Gross Profit	Ending Inventory
a. First-in, first-out (FIFO)	47.00	142.00
b. Last-in, first-out (LIFO)	35.00	130.00
c. Average cost	41.00	136.00
FIFO
Date	Particulars	Units	Cost	Amount	COGS
3-May	Purchase	1.00	130.00	130.00
10-May	Purchase	1.00	136.00	136.00
19-May	Purchase	1.00	142.00	142.00
	Total	3.00		408.00
23-May	COGS	2.00		266.00	1*130+1*136
	Ending Inventory	1.00		142.00	1*142
Sales	313.00
COGS	266.00
Gross Profit	47.00
Ending Inventory	142.00
LIFO
Date	Particulars	Units	Cost	Amount	COGS
3-May	Purchase	1.00	130.00	130.00
10-May	Purchase	1.00	136.00	136.00
19-May	Purchase	1.00	142.00	142.00
	Total	3.00		408.00
23-May	COGS	2.00		278.00	1*142 + 1*136
	Ending Inventory	1.00		130.00	1*130
Sales	313.00
COGS	278.00
Gross Profit	35.00
Ending Inventory	130.00
Weighted Average
Date	Particulars	Units	Cost	Amount	COGS
3-May	Purchase	1.00	130.00	130.00
10-May	Purchase	1.00	136.00	136.00
19-May	Purchase	1.00	142.00	142.00
	Total	3.00	136.00	408.00
23-May	COGS	2.00	136.00	272.00	2*136
	Ending Inventory	1.00	136.00	136.00	1*136
Sales	313.00
COGS	272.00
Gross Profit	41.00
Ending Inventory	136.00