Question

Problem 6-05A a1-a3,b (Video) You are provided with the following information for Swifty Inc. for the month ended June 30, 2020. Swifty uses the periodic method for inventory. Date Description Quantity Unit Cost or Selling Price June 1 Beginning inventory 45 $42 June 4 Purchase 138 45 June 10 Sale 111 73 June 11 Sale return 18 73 June 18 Purchase 55 48 June 18 Purchase return 12 48 June 25 Sale 63 79 June 28 Purchase 32 53

Calculate cost per unit. (Round answer to 2 decimal places, e.g. 5.25.) Weighted-average cost per unit $

Calculate ending inventory, cost of goods sold, gross profit under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round average-cost method answers to 2 decimal places, e.g. 1,250.25 and other answers to 0 decimal places, e.g. 1,250.) LIFO FIFO AVERAGE-COST The ending inventory $ $ $ The cost of goods sold $ $ $ Gross profit $ $ $

Calculate gross profit rate under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round answers to 1 decimal place, e.g. 51.2%.) LIFO FIFO AVERAGE-COST Gross profit rate % % %

Compare the results for the three cost flow assumptions and answer the following questions. In this period of rising prices, LIFOAverage-costFIFO gives the highest cost of goods sold and the highestlowest gross profit. LIFOAverage-costFIFO gives the lowest cost of goods sold and the lowesthighest gross profit.

Answer 1

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Swifty Inc.
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-Jun	45.00	42.00	1,890.00	45.00	42.00	1,890.00	-	42.00	-
4-Jun	138.00	45.00	6,210.00	111.00	45.00	4,995.00	27.00	45.00	1,215.00
18-Jun	43.00	48.00	2,064.00		48.00	-	43.00	48.00	2,064.00
28-Jun	32.00	53.00	1,696.00		53.00		32.00	53.00	1,696.00
Total	258.00		11,860.00	156.00		6,885.00	102.00		4,975.00
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-Jun	45.00	42.00	1,890.00		42.00	-	45.00	42.00	1,890.00
4-Jun	138.00	45.00	6,210.00	81.00	45.00	3,645.00	57.00	45.00	2,565.00
18-Jun	43.00	48.00	2,064.00	43.00	48.00	2,064.00	-	48.00	-
28-Jun	32.00	53.00	1,696.00	32.00	53.00	1,696.00	-	53.00	-
Total	258.00		11,860.00	156.00		7,405.00	102.00		4,455.00

Answer 3	Periodic Weighted Average
Date	Cost of Goods available for sale
	No. of Units	Cost per unit	Amount $
1-Jun	45.00	42.00	1,890.00
4-Jun	138.00	45.00	6,210.00
18-Jun	43.00	48.00	2,064.00
28-Jun	32.00	53.00	1,696.00
Total	258.00		11,860.00
Weighted Average cost			45.97
Number of units sold			156.00
Cost of Goods sold			7,171.16
Inventory Balance			102.00
Closing Inventory (value)			4,688.84
Answer 4
Total Sales
Date	No. of Units	Sell Price	Value
10-Jun	111.00	73.00	8,103.00
11-Jun	(18.00)	73.00	(1,314.00)
25-Jun	63.00	79.00	4,977.00
Total Sales	156.00		11,766.00

Calculation of Gross Profit
	FIFO	LIFO	Weighted Average
Sales	11,766.00	11,766.00	11,766.00
Cost of Goods sold	6,885.00	7,405.00	7,171.16
Gross Profit	4,881.00	4,361.00	4,594.84
Gross Profit %	41.48%	37.06%	39.05%	This is Gross Profit/ Sales.
Inventory, June 30	4,975.00	4,455.00	4,688.84

In this period of rising prices,

LIFO gives the highest cost of goods sold and the lowest gross profit.