Ruston Company had 600 units in inventory at the beginning of November, each assigned a $10...

Ruston Company had 600 units in inventory at the beginning of November, each assigned a $10 unit cost. Ruston also made the following purchases of inventory and sales of inventory during November.

Purchases during November

Nov 6 175 units at $11

Nov 14 250 units at $12

Nov 16 500 units at $13

Nov 28 325 units at $14

Sales in November

Nov 4 375 units sold for $20

Nov 8 200 units sold for $20

Nov 17 400 units sold for $20

Nov 24 320 units sold for $20

		Purchase			Sales
DATE	Activity	Number Units	Unit Cost	Total Purchase	Number Units	Unit Sales Price	Total Sales
11-1	Beginning Inventory	600	$10	$6,000	--		--
11-4	SALE	--		--	375	$20	$7,500
11-6	Purchase	175	$11	$1,925	--		--
11-8	SALE	--		--	200	$20	$4,000
11-14	Purchase	250	$12	$3,000	--		--
11-16	Purchase	500	$13	$6,500	--		--
11-17	SALE	--		--	400	$20	$8,000
11-24	SALE	--		--	320	$20	$6,400
11-28	Purchase	325	$14	$4,550	--		--

Instructions

Compute the April 30 ending inventory and April cost of goods sold as well as the amount of reported gross profit under the different cost flow assumptions and inventory tracking systems. Please provide calcuations.

METHOD	ENDING INVENTORY	COST OF GOODS SOLD	GROSS PROFIT
(a) Average cost, periodic
(b) Average cost, perpetual
(c) FIFO, periodic
(d) FIFO, perpetual
(e) LIFO, periodic
(f) LIFO, perpetual

Expert Solution

	AVERAGE COST PERPETUAL METHOD

	Purchase				Sales				Ending Inventory
DATE	Activity	Number Units	Unit Cost	Total Purchase	Number Units	Cost of goods sold per unit	Total cost of goods sold	Total Sales	Number	Rate	Amount
1-Nov	Beginning Inventory	600	$10	$6,000	--			--	600	$10	$6,000
4-Nov	SALE	--		--	375	$10	$3,750	$7,500	225	$10	$2,250
11-6	Purchase	175	$11	$1,925	--			--	400	$10.44	$4,175	(2250+1925)
8-Nov	SALE	--		--	200	$10.44	$2,088	$4,000	200	$10.44	$2,087.50
14-Nov	Purchase	250	$12	$3,000	--			--	450	$11.31	$5,087.50	(2087.50+3000)
16-Nov	Purchase	500	$13	$6,500	--			--	950	$12.20	$11,587.50	(5087.50+6500)
17-Nov	SALE	--		--	400	$12.20	$4,879	$8,000	550	$12.20	$6,708.55
24-Nov	SALE	--		--	320	$12.20	$3,903.16	$6,400	230	$12.20	$2,805.39
28-Nov	Purchase	325	$14	$4,550	--				555	$13.25	$7,355.39	(2805+4550)
TOTAL		1850		$21,975			$14,620.11	$25,900

	Ending Inventory	$7,355.39
	Cost of goods sold	$14,620
	Gross Profit	$11,280	(25900-14620)

	AVERAGE COST PERIODIC INVENTORY METHOD

	Quantity of beginning inventory	600
	Quantity Purchased	1250
	Total Available	1850
	Quantity sold	1295					21975
	Ending Inventory	555					6592.5
	AverageCost of ending Inventory per unit	$11.88	(17425/1850)				15382.5
	Cost of ending inventory	$6,592.50	(9.42*555)
	Cost of Purchase	$15,975	21975-6000)
	Cost of beginning Inventory	$6,000
	Cost of goods sold	$15,382.50	(15975+6000-6592.50)
	Gross Profit	$10,517.50	(25900-15382.50)


	FIFO PERPETUAL METHOD

	Purchase				Sales				Ending Inventory
DATE	Activity	Number Units	Unit Cost	Total Purchase	Number Units	Cost of goods sold per unit	Total cost of goods sold	Total Sales	Number	Rate	Amount
1-Nov	Beginning Inventory	600	$10	$6,000	--			--	600	$10	$6,000
4-Nov	SALE	--		--	375	$10	$3,750	$7,500	225	$10	$2,250
11-6	Purchase	175	$11	$1,925	--			--	225	$10.00	$2,250
									175	$11.00	$1,925
8-Nov	SALE	--		--	200	$10.00	$2,000	$4,000	25	$10.00	$250.00
									175	$11.00	$1,925.00
14-Nov	Purchase	250	$12	$3,000	--			--	25	$10.00	$250.00
									175	$11.00	$1,925.00
									250	$12.00	$3,000.00
16-Nov	Purchase	500	$13	$6,500	--			--	25	$10.00	$250.00
									175	$11.00	$1,925.00
									250	$12.00	$3,000.00
									500	$13.00	$6,500.00
17-Nov	SALE	--		--	25	$10.00	$250	$8,000	50	$12.00	$600.00
					175	$11.00	$1,925		500	$13.00	$6,500.00
					200	$12.00	$2,400
24-Nov	SALE	--		--	50	$12.00	$600.00	$6,400	230	$13.00	$2,990.00
					270	$13.00	$3,510.00
28-Nov	Purchase	325	$14	$4,550	--				230	$13.00	$2,990.00
				$21,975		Total	$14,435.00		325	$14	$4,550.00

	Ending Inventory	$7,540.00	(2990+4550)
	Cost of goods sold	$14,435
	Gross Profit	$11,465	(25900-14435)

	FIFO PERIODIC INVENTORY METHOD

	Cost of ending inventory	$7,540.00	(32514+23013)
	Beginning Inventory+Purchase	$21,975.00
	Cost of goods sold	$14,435.00	(21975-7540)
	Gross Profit	$11,465.00	(25900-14435)


	LIFO PERPETUAL METHOD

	Purchase				Sales				Ending Inventory
DATE	Activity	Number Units	Unit Cost	Total Purchase	Number Units	Cost of goods sold per unit	Total cost of goods sold	Total Sales	Number	Rate	Amount
1-Nov	Beginning Inventory	600	$10	$6,000	--			--	600	$10	$6,000
4-Nov	SALE	--		--	375	$10	$3,750	$7,500	225	$10	$2,250
11-6	Purchase	175	$11	$1,925	--			--	225	$10.00	$2,250
									175	$11.00	$1,925
8-Nov	SALE	--		--	175	$11.00	$1,925	$4,000	200	$10.00	$2,000.00
					25	$10.00	$250
14-Nov	Purchase	250	$12	$3,000	--			--	200	$10.00	$2,000.00
									250	$12.00	$3,000.00
16-Nov	Purchase	500	$13	$6,500	--			--	200	$10.00	$2,000.00
									250	$12.00	$3,000.00
									500	$13.00	$6,500.00
17-Nov	SALE	--		--	400	$13.00	$5,200	$8,000	200	$10.00	$2,000.00
									250	$12.00	$3,000.00
									100	$13.00	$1,300.00
24-Nov	SALE	--		--	100	$13.00	$1,300.00	$6,400	200	$10.00	$2,000.00
					220	$12.00	$2,640.00		30	$12.00	$360.00
28-Nov	Purchase	325	$14	$4,550	--				200	$10.00	$2,000.00
									30	$12.00	$360.00
									325	$14.00	$4,550.00
				$21,975		Total	$15,065.00		555		$6,910.00	(Emding Inventory

	Ending Inventory	$6,910.00
	Cost of goods sold	$15,065
	Gross Profit	$10,835	(25900-15065)

	LIFO PERIODIC INVENTORY METHOD

	Cost of ending inventory	$5,550.00	(555*10)
	Beginning Inventory+Purchase	$21,975.00
	Cost of goods sold	$16,425.00	(21975-5550)
	Gross Profit	$9,475.00	(25900-16425)

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