Question

Cost/selling price Units 3. June $1.00 $1.10 $1.50 $1.20 $1.30 $1.50 1 Inventory 6 Purchase Sale 50 units 50 units 70 units 150 units 100 units 210 units 10 13 Purchase Purchase Sale 20 30 Required: Using perpetual inventory system, compute ending inventory balance, cost of goods sold and gross margin under FIFO. (25 % ) Units Cost/sellins.price 1 Beginning inventory 4 Purchase June $30 33 60 300 800 8 Sale 12 Purchase 16 Sale 20 Sale 400 1,000 700 500 36 60 60 Required: Using periodic inventory system, Compute ending inventory balance, cost of goods sold and gross margin under LIFO. (25%)

Answer 1

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	Goods purchased			Cost of goods sold			Balance in inventory
Date	Units	Unit cost	Total $	Units	Unit cost	Total $	Units	Unit cost	Total $
June 1							50	1	50
6							50	1	50
							50	1.10	55
10				50	1	50
				20	1.10	22	30	1.10	33
13	150	1.20	180				30	1.10	33
							150	1.20	180
20	100	1.30	130				30	1.10	33
							150	1.20	180
							100	1.30	130
30				30	1.10	33
				150	1.20	180
				30	1.30	39	70	1.30	91
				Cost of goods sold		324	Ending inventory		91

Ending inventory = $91

Cost of goods sold = $324

Gross profit margin = revenue – cost of goods sold = ((70*1.50)+(210*1.50))-324 = $96