Question

Problem 3 Sue restaurant purchased the following wine during month of June June 1, purchased 20 bottles at $16 each June 6, purchased 36 bottles at $17.00 June 24, purchased 42 bottles at $15.50 each During June, 75 bottles were sold at $24 each Calculate the ending inventory, cost of sales, and gross profit using following: 1) First in- first out method 2) Last in- last out method 3) Weighted average method

Answer 1

Answer to Problem 3:

Cost of Goods available for Sale = Cost of Beginning Inventory + Cost of Purchases
Cost of Purchases = (20 * $16.00) + (36 * $17.00) + (42 * $15.50)
Cost of Purchases = $1,583.00

Units available for Sale = 20 + 36 + 42 = 98 Units

Cost of Goods available for Sale = $0 + $1,583.00
Cost of Goods available for Sale = $1,583.00

Sales = 75 * $24.00
Sales = $1,800.00

Part 1.
Cost of Goods Sold = (20 * $16.00) + (36 * $17.00) + (19 * $15.50)
Cost of Goods Sold = $1,226.50

Ending Inventory = Cost of Goods available for Sale – Cost of Goods Sold
Ending Inventory = $1,583.00 - $1,226.50
Ending Inventory = $356.50

Gross Profit = Sales – Cost of Goods Sold
Gross Profit = $1,800.00 - $1,226.50
Gross Profit = $573.50

Part 2.
Cost of Goods Sold = (42 * $15.50) + (33 * $17.00)
Cost of Goods Sold = $1,212.00

Ending Inventory = Cost of Goods available for Sale – Cost of Goods Sold
Ending Inventory = $1,583.00 - $1,212.00
Ending Inventory = $371.00

Gross Profit = Sales – Cost of Goods Sold
Gross Profit = $1,800.00 - $1,212.00
Gross Profit = $588.00

Part 3.
Average Cost per Unit = $1,583.00 / 98
Average Cost per Unit = $16.15

Cost of Goods Sold = 75 * $16.15
Cost of Goods Sold = $1,211.            25

Ending Inventory = Cost of Goods available for Sale – Cost of Goods Sold
Ending Inventory = $1,583.00 - $1,211.25
Ending Inventory = $371.75

Gross Profit = Sales – Cost of Goods Sold
Gross Profit = $1,800.00 - $1,211.25
Gross Profit = $588.75