Question

The beginning inventory for Midnight Supplies and data on purchases and sales for a three month period are as follows:

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

	Instructions
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.
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.
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 and use that amount in subsequent computations.
4.	Compare the gross profit and the March 31 inventories.

please show work

Answer 1

(1) Periodic FIFO :-

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic FIFO			Ending Inventory-Periodic FIFO (March 31)
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic FIFO	# of units	Cost pu	Ending Inventory-Periodic FIFO
Beginning Inventory	7500	$75	$562500	7500	$75	$562500
Purchases:-
Jan 10	22500	$85	$1912500	22500	$85	$1912500
Feb 10	54000	$87.50	$4725000	54000	$87.50	$4725000
March 5	45000	$89.50	$4027500	41250	$89.50	$3691875	3750	$89.50	$335625
March 25	7500	$90	$675000				7500	$90	$675000
Total	136500		$11902500	125250		$10891875	11250		$1010625

Inventory on March 31 = $1010625

COGS = $10891875

(2) Periodic LIFO :-

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic LIFO			Ending Inventory-Periodic LIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic LIFO	# of units	Cost pu	Ending Inventory-Periodic LIFO
Beginning Inventory	7500	$75	$562500				7500	$75	$562500
Purchases:-
Jan 10	22500	$85	$1912500	18750	$85	$1593750	3750	$85	$318750
Feb 10	54000	$87.50	$4725000	54000	$87.50	$4725000
March 5	45000	$89.50	$4027500	45000	$89.50	$4027500
March 25	7500	$90	$675000	7500	$90	$675000
Total	136500		$11902500	125250		$11021250	11250		$881250

Inventory on March 31 = $881250

COGS = $11021250

(3) Average cost :-

Average cost	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Available for Sale
Beginning Inventory	7500	$75	$562500	125250    $87.20 $10921800			11250     $87.20              $981000
Purchases:-
Jan 10	22500	$85	$1912500
Feb 10	54000	$87.50	$4725000
March 5	45000	$89.50	$4027500
March 25	7500	$90	$675000
Total	136500		$11902500	125250		$10921800	11250		$981000

Avg cost per unit = Total cost available for sale/No of units available for sale

     = $11902500/136500= $87.20

Inventory on March 31 = $981000

COGS = $10921800

(4)

	FIFO	LIFO	Weighted Avg
Sale ($1687500+$562500+$225000+$4320000+$4080000+$4800000+$4200000	$19875000	$19875000	$19875000
(-) COGS	$1089875	$11021250	$10921800
Gross Profit	$18785125	$8853750	$8953200
Ending Inventory	$1010625	$881250	$981000