Question

Omamental Iron Works began August with 70 units of iron inventory that cost $25 each. During August, the company completed the following inventory transactions (Click the icon to view the transactions.) Read the requirements. Requirement 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Inventory on Hand Unit Purchases Cost of Goods Sold Total Total Unit Unit Total Quantity Date Quantity Cost Cost Cost Cost Quantity Cost Cost Aug. 1 3 21 30 Totals Requirement 2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Inventory on Hand Purchases Cost of Goods Sold Total Unit Units Total Unit Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Aug. 1 3 8 21 30 Totals

Answer 1

Requirement 1. FIFO Purchase Cost of Goods Sold Inventory on Hand | Date Unit Total Unit Total Unit Total QuantityCost Cost JQuantity Cost Cost Quantity Cost Cost Aug 1 $25 $1,750 Aug 3 60 $25 $1,500 $25 $250 Aug. 8 $43 $3,440 $25 $250 $43 $3,440 Aug 21 10 $25 $250 60 $43 $2,580 $43 $860 Aug 30 201 $49 $980 Sol $43 $860 $49 $980 Totals 100 $4,4201 130 $4,330 $1,840

OU Requirement 2. LIFO Purchase Cost of Goods Sold Inventory on Hand Date Unit Total Unit Total Unit Total Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Aug 1 $25 $1,750 Aug 3 60 $25 $1,500 $25 $250 Aug. 8 80 $43 $3,440 $25 $250 80 $43 $3,440 Aug 21 70 $25 $1,750 $25 $250 $43 $430 Aug 30 20 $49) $9801 $25 $250 $43 $4301 $49 $980 Totals 1001 $4,420 130 $3,250 $1,660

Requirement 3. Weighted Average Purchase | Cost of Goods Sold Date Unit Total Unit Total Quantity Cost Cost Quantity Cost Cost Aug. 1 Aug 3 60 $25 $1,500 Aug. 8 80 $43 $3,440 Aug 21 70 $41$2,870 Aug 30 20 $49 $980 Totals 1001 $4,420 130 $4,370 Inventory on Hand Unit Total Quantity Cost Cost $25 $1,750 $25 $250 $41 $3,6901 $41| $8201 40 $45 $1,800 $1,800 3701

Requirement 4. Cost of Goods sold amount for August using FIFO inventory costing is Cost of Goods sold amount for August using LIFO inventory costing is Cost of Goods sold amount for August using Weighted average inventory costing is $4,330 $3,250 $4,370

Requirement 5. Computation of gross profitfor August using FIFO, LIFO, Weighted Average inventory costing method: Sales Revenue - Cost of Goods Sold = Gross Profit FIFO $9,970- $4,330 = $5,640 LIFO $9,970 $3,250 = $6,720 Weighted Average $9,970- $4,370 = $5,600 Requirement 6. If the business wanted to maximize gross profit, it would select the LIFO method