Instructions
1. Determine the inventory on June 30, 2014, and the cost of goods sold for the threemonth period, using the first-in, first-out method and the periodic inventory system.
2. Determine the inventory on June 30, 2014, and the cost of goods sold for the threemonth period, using the last-in, first-out method and the periodic inventory system.
3. Determine the inventory on June 30, 2014, and the cost of goods sold for the threemonth period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the dollar.
4. Compare the gross profit and June 30, 2014, inventories using the following column headings:
FIFO LIFO Weighted Average
Sales
Cost of merchandise sold
Gross profit
Inventory, June 30, 2014
Answer:
1. First-In, First-Out Method
Merchandise inventory, June 30, 2014…………………………………… $ 32,864
Cost of merchandise sold………………………………………..…………… 310,776
Supporting computations
Merchandise inventory:
26 units @ $1,264……………………………………………...……… $ 32,864
Cost of merchandise sold:
Beginning inventory, April 1, 2014………………………………………… $ 30,000
Purchases……………………………………………………………….……… 313,640
Merchandise available for sale……………………………………….…… $343,640
Less ending inventory, June 30, 2014…………………………………… 32,864
Cost of merchandise sold………………………………………………….. $310,776
2. Last-In, First-Out Method
Merchandise inventory, June 30, 2014…………………………………… $ 31,240
Cost of merchandise sold…………………………………….…………… 312,400
Supporting computations
Merchandise inventory:
25 units @ $1,200………………………………………………………… $30,000
1 unit @ $1,240………………………………………………………… 1,240
26 units…………………………………………………………………… $31,240
Cost of merchandise sold:
Beginning inventory, April 1, 2014………………………………………… $ 30,000
Purchases…………………………………………………………………...… 313,640
Merchandise available for sale…………………………………………… $343,640
Less ending inventory, June 30, 2014…………………………………… 31,240
Cost of merchandise sold…………………………………………………… $312,400
3. Weighted Average Cost Method
Merchandise inventory, June 30, 2014……………………… $ 32,500
Cost of merchandise sold…………………………………… 311,140
Supporting computations
Weighted Average Unit Cost = Total Cost of Merchandise Available for Sale
Units Available for Sale
= $343,640
275 units = $1,250 per unit (rounded)
Merchandise inventory:
26 units × $1,250 = $32,500
Cost of merchandise sold:
Beginning inventory, April 1, 2014…………………………. $ 30,000
Purchases………………………………………………………… 313,640
Merchandise available for sale……………………………… $343,640
Less ending inventory, June 30, 2014……………………… 32,500
Cost of merchandise sold……………………………………… $311,140
4. Weighted
FIFO LIFO Average
Sales $525,250 $525,250 $525,250
Cost of merchandise sold 310,776 312,400 311,140
Gross profit $214,474 $212,850 $214,110
Inventory, June 30, 2014 $ 32,864 $ 31,240 $ 32,500