Question

Using the (a) FIFO, (b) LIFO, and (c) weighted average cost methods, calculate gross profit and ending inventory. The company uses a specific identification inventory cost flow method. On October 21, the company sold 5 units for $90 each.  

Date		Units	Cost/Unit	Total Cost
Oct. 2	Purchase	2	$21	$ 42
7	Purchase	2	$22	44
12	Purchase	1	$28	28
18	Purchase	4	$30	120
Total		9		$234

Answer 1

Solution:

Computation of COGS and ending inventory - Periodic FIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Purchases:
2-Oct	2	$21.00	$42	2	$21.00	$42.00	0	$21.00	$0.00
7-Oct	2	$22.00	$44	2	$22.00	$44.00	0	$22.00	$0.00
12-Oct	1	$28.00	$28	1	$28.00	$28.00	0	$28.00	$0.00
18-Oct	4	$30.00	$120	0	$30.00	$0.00	4	$30.00	$120.00
Total	9		$234	5		$114.00	4		$120.00

Computation of COGS and ending inventory - Periodic LIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Purchases:
2-Oct	2	$21.00	$42	0	$21.00	$0.00	2	$21.00	$42.00
7-Oct	2	$22.00	$44	0	$22.00	$0.00	2	$22.00	$44.00
12-Oct	1	$28.00	$28	1	$28.00	$28.00	0	$28.00	$0.00
18-Oct	4	$30.00	$120	4	$30.00	$120.00	0	$30.00	$0.00
Total	9		$234	5		$148.00	4		$86.00

Computation of COGS and ending inventory - Periodic Weighted Average cost method
Particulars	Cost of goods available for sale			Cost of goods sold - Average cost			Ending Inventory - Average cost
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Purchases:
2-Oct	2	$21.00	$42
7-Oct	2	$22.00	$44
12-Oct	1	$28.00	$28
18-Oct	4	$30.00	$120
Total	9	$26.00	$234	5	$26.00	$130	4	$26.00	$104

Computation of Gross Profit
Particulars	FIFO	LIFO	Weighted Average
Sales Revenue	$450.00	$450.00	$450.00
Cost of goods sold	$114.00	$148.00	$130.00
Gross Profit	$336.00	$302.00	$320.00

Answer 2

using the following information, calculate gross profit for the month of March using FIFO,LIFO and Weighted average.

dates	details	units	unit prce	value
08/03/12	delivery from manufacturer	500	10	5000
12/03/12	Delivery from Manufacturer	100	11.20	1120
17/03/12	issued to sales	400
25/03/12	Delivery from Manufacturer	300	11.20	1120
27/03/12	Issued for sales	250

sales of 650 units @ P20 per Item are recorded for the Month. There is an opening stock of 250 units, valued at P 2000 at 1st March 2012.