Homework Question: - Fahed Co incurred the following transactions during the month of December 2019. December...

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Homework Question: - Fahed Co incurred the following transactions during the month of December 2019. December 1: Beginning In

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Answer 1

Answer #1

Average method:

Total units available for sale= 100+50+30+120+90=390

Inventory total cost= (100×$5)+(50×$5.50)+(30×$5.25)+(120×$4.75)+(90×5.75)=$2020.

Weighted average unit cost =$2020÷390 =$5.17.

Units to sold = 130+45+80+30+80=365 units

Ending inventory = 390-365 = 25 units

Cost of ending inventory = 25×$5.17= 129.25.

Cost of goods sold = Beginning inventory + purchases - ending inventory

500 + 1520-129.25 =$1890.75

Gross profit = Sales - Cost of goods sold = $4,412.5 -$1890.75= $2,521.75.

FIFO METHOD

Units sold = 130+45+80+30+80= 365 units.

Ending inventory= 100+290-365= 25 units

The cost of goods sold equals the sum of each sales cost

Cost of December 13 sale = (100×$5)+(30×$5.50)= $665

Cost of December 15 sale =(20×$5.50)+(25×$5.25)=$241.25

Cost of December 22 sale=(5×$5.25)+(75×$4.75)=$382.5

Cost of December 25 sale=(30×$4.75)=$142.5

Cost of December 31 sale=(15×$4.75)+(65×$5.75)=$445

Cost of goods sold=$1876.25

Cost of ending inventory= 25×$5.75= $143.75

Gross profit= sales - Cost of goods sold = $4,412.5-$1876.5 = $2536.

*Sales = (130×$12)+(45×$12.50)+(80×$12.25)+(30×$13)+(80×$11.50)=$4,412.5.

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