Question

Assume that Gameland store bought and sold a line of dolls during December as​ follows:

gameland uses the perpetual inventory system.

Dec. 1 Beginning merchandise inventory 14 units @ $11each

8 Sale 8 units @ $19 each 14

Purchase 16 units @ $13 each 21

Sale 14 units @ $19 each

Requirments: 1 Compute the cost of goods​ sold, cost of ending merchandise​ inventory, and gross profit using the FIFO inventory costing method. 2. Compute the cost of goods​ sold, cost of ending merchandise​ inventory, and gross profit using the LIFO inventory costing method. 3. Which method results in a higher cost of goods​ sold? 4. Which method results in a higher cost of ending merchandise​ inventory? 5. Which method results in a higher gross​ profit?

Answer 1

Ansuona cu Perpetual- Fifo mellod s- gues = (x $19) + (14x $19) - $152 + $266 = $418 cost of goods sold Purchases units Unit cost Endling Inventory Units Unitcost Total $11 $154 Total Units Unit cost Total 1 Data 14 Deci $11 $66 8 811 088 Dec 8 $66 beciu ) 16 $11 013 $208 $13 $104 Dec 21 $ 104, Total $13 $208 1 16 $11 $66 68 $13 4095 $104 22 $258 8 - cost of goods sold: 4258 Ending inventony = $ lou Gross profit = sales- cost of goods sold = $418 – $ 258 2 $160

(2Perpetual- Liro melhod :- purchajes cost of goods sold 1 Ending muentory Unis untcost Total 14 411 $154 Total Unit cost 1 Units Total Date units Unit cost DOC) $11 18 4886 $11 566 Dec 8 $66 Dec 14 | 16 $13 $208 woood $13 $208 $66 $26 14 $13 $162 Dec 21 $13 22 $ 270 $92 8 Total : cost of goods sold= $270 Ending inventory a $92 Gross profit = $418- $270 = $ 148 (31 LIFO melted resuts in a higher cost of goods sotel lę. $270. (4) Fito method results in a hicher cost of ending inventory rien $104, 5 PIFO method results in a higher Gross profil 10, $160 SV