Question

Application Problem 7-6A a-b (Part Level Submission) The following information relates to Glassworks Ltd.'s inventory transactions during the month of July. July 1 4 8 14 22 28 Beginning inventory Purchase Sale Sale Purchase Sale Units Cost/Unit Amount 4,300 $12.00 $51,600 5,700 $13.00 74,100 6,600 1,400 4,690 $12.50 59,094 2,970 All of the units sold were priced at $18 per unit. (a) Glassworks Ltd, uses the perpetual inventory system. Calculate Glassworks' cost of goods sold, gross margin, and ending inventory for the month of July using: 1. FIFO ii. weighted average (Round calculations for cost per unit to 4 decimal places, e.g. 10.5219 and final answers to o decimal places, e.g. 61,052.) Cost of Goods Sold Gross Margin Ending Inventory i. FIFO ii. Weighted average

Answer 1

1) FIFO Method

Date	Purchases			Cost of Goods Sold			Inventory
	Units	Unit cost	Total cost	Units	Unit cost	Total cost	Units	Unit cost	Total cost
Jul 1							4300	$12.00	$51600
Jul 4	5700	$13.00	$74100				4300	$12.00	$51600
							5700	$13.00	74100
									$125700
Jul 8				4300	$12.00	$51600	3400	$13.00	$44200
				2300	$13.00	29900
						$81500
Jul 14				1400	$13.00	$18200	2000	$13.00	$26000
Jul 22	4690	$12.60	$59094				2000	$13.00	$26000
							4690	$12.60	59094
									$85094
Jul 28				2000	$13.00	$26000	3720	$12.60	$46872
				970	$12.60	12222
						$38222
Total						$137922			$46872

Sales (10970*$18)	$197460
Less: Cost of goods sold	(137922)
Gross margin	$59538
Ending inventory	$46839

2) Weighted average method

Date	Purchases			Cost of Goods Sold			Inventory
	Units	Unit cost	Total cost	Units	Unit cost	Total cost	Units	Unit cost	Total cost
Jul 1							4300	$12.00	$51600
Jul 4	5700	$13.00	$74100				4300	$12.00	$51600
							5700	$13.00	74100
Total							10000	(125700/10000)= $12.57	$125700
Jul 8				6600	$12.57	$82962	3400	(42738/3400)= $12.57	$42738
Jul 14				1400	$12.57	$17598	2000	(25140/2000)= $12.57	$25140
Jul 22	4690	$12.60	$59094				2000	$12.57	$25140
							4690	$12.60	59094
Total							6690	(84234/6690)= $12.5910	$84234
Jul 28				2970	$12.5910	$37395	3720	$12.5910	$46839
Total						$137955			$46839

Sales (10970*$18)	$197460
Less: Cost of goods sold	(137955)
Gross margin	$59505
Ending inventory	$46839