Question

0 More Info May 1 Beginning merchandise inventory 11 Purchase 23 Sale 26 Purchase 22 tires @ 14 tires @ 18 tires @ 10 tires @ 19 tires @ $ $ $ $ $ 53 each 71 each 86 each 74 each 86 each 29 Sale Print Done

Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method.

Requirement 2. Compute cost of goods sold and gross profit using the LIFO inventory costing method.

Requirement 3. Compute cost of goods sold and gross profit using the weighted-average inventory costing method. (Round weighted average cost per unit to the nearest cent and all other amounts to the nearest dollar.)

Requirement 4. Which method results in the largest gross profit, and why?

Answer 1

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Due to character limit I am attaching the image for weighted average and gross profit. Perpetual Weighted Average Cost of Goods available for sale Date No. of Units Cost per unit Amount May 1 22.00 53.00 1,166.00 Cost of Goods sold Inventory Balance No. of Units Cost per unit Cost of Goods sold No. of Units Cost per unit Inventory Balance 600.00 60.00 36,000.00 May 11 14.00 71.00 994.00 22.00 14.00 36.00 53.00 71.00 60.00 1,166.00 994.00 2,160.00 Use this fo May 23 18.00 60.00 1,080.00 18.00 60.00 1,080.00 May 26 L 10.00 74.00 740.00 18.00 10.00 28.00 60.00 74.00 65.00 1,080.00 740.00 1,820.00 Use this fc 65.00 65.00 May 29 Ending Inventory 19.00 37.00 1,235.00 2,315.00 9.00 9.00 585.00 585.00 Value Total Sales Date May 23 May 29 Total Sales No. of Units 18.00 19.00 37.00 Sell Price 86.00 86.00 86 1,548.00 1,634.00 3,182.00 FIFO LIFO Weighted Sales 3,182.00 3,182.00 3,182.00 Cost of Goods sold 2,234.00 2,423.00 2,315.00 Gross Profit 948.00 759.00 867.00 FIFO gives the highest gross profit because units purchased first are at low cost and they are sold first so because of low cost gross profit is higher.

Perpetual 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
May 1	22.00	53.00	1,166.00				22.00	53.00	1,166.00
May 11	14.00	71.00	994.00				22.00	53.00	1,166.00
							14.00	71.00	994.00
May 23				18.00	53.00	954.00	4.00	53.00	212.00
							14.00	71.00	994.00
May 26	10.00	74.00	740.00				4.00	53.00	212.00
							14.00	71.00	994.00
							10.00	74.00	740.00
May 29				4.00	53.00	212.00	9.00	74.00	666.00
				14.00	71.00	994.00
				1.00	74.00	74.00
Ending Inventory				37.00		2,234.00	9.00		666.00
Perpetual 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
May 1	22.00	53.00	1,166.00				22.00	53.00	1,166.00
May 11	14.00	71.00	994.00				22.00	53.00	1,166.00
							14.00	71.00	994.00
May 23				14.00	71.00	994.00	18.00	53.00	954.00
				4.00	53.00	212.00
May 26	10.00	74.00	740.00				18.00	53.00	954.00
							10.00	74.00	740.00
May 29				9.00	53.00	477.00	9.00	53.00	477.00
				10.00	74.00	740.00
Ending Inventory				37.00		2,423.00	9.00		477.00