Question

Application Problem 7-3A a-b (Part Level Submission) Soft Touch Company sells leather furniture. The following schedule relates to the company's inventory for the month of April: Sales Cost $46,056 27,810 $30,827 April 1 3 5 11 15 22 28 Beginning inventory Purchase Sale Purchase Sale Sale Purchase 76 units 45 units 29 units 28 units 58 units 34 units 51 units 18,340 75,110 40,290 34,578 Soft Touch uses the periodic inventory system. (a) Calculate Soft Touch Company's cost of goods sold, gross margin, and ending inventory using: i. FIFO ii. Weighted average (Round calculations for cost per unit to 2 decimal places, e.g. 10.52. Round answers under weighted-average to 2 decimal places, e.g. 61,052.79.) Cost of Goods Sold Gross Margin Ending Inventory i. FIFO ii. Weighted average $

Answer 1

Ans Gross Margin Cost of Good Sold $73,866 $76,704 Ending Inventory $52,918 $50,080 i. FIFO ii. Weighted Average $72,361 $69,523 Note (i) Periodic inventory System: In this system, the cost of sales and inventory are determined as the end of the accounting First in, first out method (FIFO): In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of recent purchases. Cost of Goods Sold Ending inventory Date Unit Amount Date Unit Amount $46,056 Apr 11 28 $18,340 Apr 3 45 $27,810 Apr 28 51 $34,578 121 $73,866 79 $52,918 Apr 1 Note (ii) In weighted average cost method per unit purchase is derived by adding cost opening inventory and purchase made during the year and then dividing it by the adding the units of opening inventory and units purchased during the year Date Unit Amount Apr 1 76 $46,056 Apr 3 45 $27,810 Apr 11 $18,340 $34,578 200 $1,26,784 Average Cost ($126784/200] $633.92 Particulars Unit Amount Cost of Good Sold 121 $76,704 Ending inventory $50,080 Apr 28 79 Note (iii) Sales Less: Cost of Good sold Gross Margin FIFO Weighted Average $1,46,227 $1,46, 227 ($73,866) ($76,704) $72,361 $69,523