Question

Monty Inc. is a retailer operating in Centralia. Monty uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory. (Assume that the inventory is not damaged.) Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Monty Inc. for the month of January 2017. Date Description Quantity Unit Cost or Selling Price Dec. 31 Ending inventory 168 $14 Jan. 2 Purchase 144 15 Jan. 6 Sale 180 28 Jan. 9 Purchase 102 18 Jan. 10 Sale 84 32 Jan. 23 Purchase 120 21 Jan. 30 Sale 132 37 (a) For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (1) FIFO. (2) FIFO. (3) Moving-average. (Round average cost per unit to 3 decimal places, e.g. 1.286 and final answers to 0 decimal places, e.g. 5,125.) LIFO FIFO Moving-average Cost of goods sold $ $ $ Ending inventory $ $ $ Gross profit $ $ $

Answer 1

		FIFO	LIFO	Moving Average
	Cost of goods sold	6,024	6,912	8,255
	Ending Inventory	2,844	1,956	2,821
	Gross Profit	$    6,588	$    5,700	$    4,357

Workings: Purchases Purchases Cost per Total FIFO Quantity unit cost Beginning Inventory Jan-02 144 $ 15 $ 2,160 Cost of goods sold Cost per Total Quantity unit cost Inventory on hand Cost per Total Quantity unit cost 168 $ 14$ 4,560 168 $ 14 $ 4,560 144 $ 15 $ 2,160 132 $ 15 $ 1,980 Jan-06 168 $ 12$ 14$ 2,352 15$ 180 Jan-09 102 $ 18 $ 1,836 Jan-10 84$ 15 $ 1,260 Jan-23 120 $ 21 $ 2,520 132 $ 102 $ 48 $ 102 $ 48$ 102 $ 120 $ 18 $ 120 $ 138 15 $ 1,980 18 $ 1,836 15 $ 720 18 $ 1,836 15$ 720 18 $ 1,836 21 $ 2,520 18$ 324 21 $ 2,520 2,844 Jan-30 48 $ 84 $ 396 15$ 720 18 $ 1,512 6,024 Totals 366 6,516

Purchases Cost per Total LIFO Quantity unit cost Beginning Inventory Jan-02 144 $ 15 $ 2,160 Cost of goods sold Cost per Total Quantity unit cost Inventory on hand Cost per Total Quantity unit cost 168 $ 14$ 4,560 168 $ 14 $ 4,560 144 $ 15 $ 2,160 132 $ 14 $ 1,848 Jan-06 144$ 36 $ 15$ 2,160 14 $ 504 Jan-09 102 $ 18 $ 1,836 Jan-101 849 18 $ 1,512 132 $ 102 $ 1 32$ 18 $ 132 $ 18 $ 120 $ 14 $ 1,848 18 $ 1,836 14$ 1,848 18$ 324 14$ 1,848 18$ 324 21 $ 2,520 Jan-23 120 $ 21 $ 2,520 Jan-301 120 $ 12$ 396 21 $ 2,520 18 $ 216 6,912 $ 18 $ 6 138 108 1,956 Totals 366 6,516

Purchases Cost per Total Moving Average Quantity unit cost Beginning Inventory Jan-02 144 $ 15 $ 2,160 Cost of goods sold cost per Total Quantity unit cost 180 $ 21.538 $ 3,877 Jan-06 Jan-09 102 $ 18 $ 1,836 Inventory on hand Cost per Total Quantity unit cost 168 $ 14$ 4,560 168 $ 14$ 4,560 144 $ 15 $ 2,160 312 $ 21.538$ 6,720 132 $21.538 $ 2,843 132 $21.538 $ 2,843 102 $ 18 $ 1,836 234 $19.996$ 4,679 150 $19.996 $ 2,999 150 $ 19.996 $ 2,999 120 $ 21 $ 2,520 270 $20.442$ 5,519 138 $20.442 $ 2,821 138 2,821 $19.996 $ 1,680 Jan-10 Jan-23 120 $ 21 $ 2,520 Jan-30 132 $20.442 $ 2,698 396 Totals 366 6,516 8,255 Sales Revenue (180 X $28) + (84 X $32)+(132 X $37) $ 12,612 Sales Revenue Cost of goods sold Gross Profit FIFO LIFO Moving Average $ 12,612 $ 12,612 $12,612 $ 6,024 $ 6,912 $ 8,255 $ 6,588 $ 5,700 $ 4,357