Question

Periodic inventory by three methods

The beginning inventory for Midnight Supplies and data on purchases and sales for a three-month period are shown below:

Date	Transaction	Number of Units		Per Unit		Total
Jan. 1	Inventory	7,500		$75.00		$562,500
10	Purchase	22,500		85.00		1,912,500
28	Sale	11,250		150.00		1,687,500
30	Sale	3,750		150.00		562,500
Feb. 5	Sale	1,500		150.00		225,000
10	Purchase	54,000		87.50		4,725,000
16	Sale	27,000		160.00		4,320,000
28	Sale	25,500		160.00		4,080,000
Mar. 5	Purchase	45,000		89.50		4,027,500
14	Sale	30,000		160.00		4,800,000
25	Purchase	7,500		90.00		675,000
30	Sale	26,250		160.00		4,200,000

1. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

Inventory, March 31	$
Cost of goods sold	$

2. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Inventory, March 31	$
Cost of goods sold	$

3. Determine the inventory on March 31 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the nearest cent.

Inventory, March 31	$
Cost of goods sold	$

4. Compare the gross profit and the March 31 inventories, using the following column headings. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

	FIFO	LIFO	Weighted Average
Sales	$	$	$
Cost of goods sold
Gross profit	$	$	$
Inventory, March 31	$	$	$

Answer 1

Solution

Midnight Supplies
Answer 1	Periodic FIFO
Date	Cost of Goods available for sale	Cost of Goods sold	Inventory Balance
No. of Units	Cost per unit	Amount	No. of Units	Cost per unit	Cost of Goods sold	No. of Units	Cost per unit	Inventory Balance
1-Jan	7,500.00	75.00	562,500.00	7,500.00	75.00	562,500.00	-	75.00	-
10-Jan	22,500.00	85.00	1,912,500.00	22,500.00	85.00	1,912,500.00	-	85.00	-
10-Feb	54,000.00	87.50	4,725,000.00	54,000.00	87.50	4,725,000.00	-	87.50	-
5-Mar	45,000.00	89.50	4,027,500.00	41,250.00	89.50	3,691,875.00	3,750.00	89.50	335,625.00
25-Mar	7,500.00	90.00	675,000.00				7,500.00	90.00	675,000.00
Total	136,500.00		11,902,500.00	125,250.00		10,891,875.00	11,250.00		1,010,625.00
Answer 2	Periodic LIFO
Date	Cost of Goods available for sale	Cost of Goods sold	Inventory Balance
No. of Units	Cost per unit	Amount	No. of Units	Cost per unit	Cost of Goods sold	No. of Units	Cost per unit	Inventory Balance
1-Jan	7,500.00	75.00	562,500.00				7,500.00	75.00	562,500.00
10-Jan	22,500.00	85.00	1,912,500.00	18,750.00	85.00	1,593,750.00	3,750.00	85.00	318,750.00
10-Feb	54,000.00	87.50	4,725,000.00	54,000.00	87.50	4,725,000.00	-	87.50	-
5-Mar	45,000.00	89.50	4,027,500.00	45,000.00	89.50	4,027,500.00	-	89.50	-
25-Mar	7,500.00	90.00	675,000.00	7,500.00	90.00	675,000.00	-	90.00	-
Total	136,500.00		11,902,500.00	125,250.00		11,021,250.00	11,250.00		881,250.00

Answer 3	Periodic Weighted Average
Date	Cost of Goods available for sale
No. of Units	Cost per unit	Amount $
1-Jan	7,500.00	75.00	562,500.00
10-Jan	22,500.00	85.00	1,912,500.00
10-Feb	54,000.00	87.50	4,725,000.00
5-Mar	45,000.00	89.50	4,027,500.00
25-Mar	7,500.00	90.00	675,000.00
Total	136,500.00		11,902,500.00
Weighted Average cost			87.20
Number of units sold			125,250.00
Cost of Goods sold			10,921,524.73
Inventory Balance			11,250.00
Closing Inventory (value)			980,975.27

Answer 4
Total Sales
Date	No. of Units	Sell Price	Value
28-Jan	11,250.00	150.00	1,687,500.00
30-Jan	3,750.00	150.00	562,500.00
5-Feb	1,500.00	150.00	225,000.00
16-Feb	27,000.00	160.00	4,320,000.00
28-Feb	25,500.00	160.00	4,080,000.00
14-Mar	30,000.00	160.00	4,800,000.00
30-Mar	26,250.00	160.00	4,200,000.00
Total Sales	125,250.00		19,875,000.00
Calculation of Gross Profit
	FIFO	LIFO	Weighted Average
Sales	19,875,000.00	19,875,000.00	19,875,000.00
Cost of Goods sold	10,891,875.00	11,021,250.00	10,921,524.73
Gross Profit	8,983,125.00	8,853,750.00	8,953,475.27
Inventory, March 31	1,010,625.00	881,250.00	980,975.27

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