Question

During the year, TRC Corporation has the following inventory transactions.

Date		Transaction	Number of Units			Unit Cost			Total Cost
Jan.	1	Beginning inventory		59		$	51			$	3,009
Apr.	7	Purchase		139			53				7,367
Jul.	16	Purchase		209			56				11,704
Oct.	6	Purchase		119			57				6,783
				526						$	28,863

For the entire year, the company sells 445 units of inventory for $69 each.

Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

Using LIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

Using weighted-average cost, calculate ending inventory, cost of goods sold, sales revenue, and gross profit. (Round "Average Cost per unit" to 4 decimal places and all other answers to the nearest whole number.)

Answer 1

	FIFO	LIFO	Weighted average cost
Ending inventory	4,617	4,175	4,441
Cost of goods sold	24,246	24,688	24,418
Sales revenue	30,705	30,705	30,705
Gross profit	6,459	6,017	6,287

Explanation:

FIFO: Total units available for sale = beginning inventory+purchases = 59+139+209+119 = 526 units.

Total units sold = 445 and so ending inventory = 526-445 = 81 units. These 81 units will be from the latest purchases and so it will be from the Oct 6 purchase @ $57 per unit. Thus value of ending inventory = 81*57 = $4,617

Cost of goods sold = starting inventory + purchases – ending inventory. Starting inventory = 3,009. Purchases = 7367+11704+6783 = $25,854. Ending inventory = 4617. Thus cost of goods sold = 3,009+25854-4617 = $24,246.

Sales revenue = 445*69 = 30,705. Thus gross profit = sales – cost of goods sold = 30,705 – 24,246 = 6,459

LIFO: Here the 81 units will be from the earliest stock so value of ending inventory = (59*51)+(22*53) = 4175. Cost of goods sold = starting inventory + purchases – ending inventory. Starting inventory = 3,009. Purchases = 7367+11704+6783 = $25,854. Ending inventory = 4175. Thus cost of goods sold = 3,009+25854-4175 = 24688

Sales revenue = 445*69 = 30,705. Thus gross profit = 30705-24688 = 6017

Average cost method: Total cost of beginning inventory + purchases = 3009+7367+11704+6783 = 28863. Average cost = 28863/526 = 54.8276

Thus ending inventory = 81*54.8276 = 4441. Cost of goods sold = 445*54.8276 = 24,418 and gross profit = 30705-24418 = 6287.