Question

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

600

units

@ $35 per unit

Feb.

10

Purchase

300

units

@ $32 per unit

Mar.

13

Purchase

150

units

@ $20 per unit

Mar.

15

Sales

725

units

@ $80 per unit

Aug.

21

Purchase

190

units

@ $40 per unit

Sept.

5

Purchase

540

units

@ $37 per unit

Sept.

10

Sales

730

units

@ $80 per unit

Totals

1,780

units

1,455

units

    
Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 200 from the February 10 purchase, 150 from the March 13 purchase, 140 from the August 21 purchase, and 365 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

Answer 1

Answers

• All working forms part of the answer
• Question requires answers that will go SO LONG
• Requirement #1

--Working

	Cost of Goods available for sale
	Units	Cost/unit	COG for sale
Beginning Inventory	600	$                35.00	$                      21,000.00
Purchases:
	300	$                32.00	$                        9,600.00
	150	$                20.00	$                        3,000.00
	190	$                40.00	$                        7,600.00
	540	$                37.00	$                      19,980.00
TOTAL	1780		$                      61,180.00

---Answers:
--Cost of Goods available for sale = $ 61,180
No. of units available for sale = 1,780 units

• Requirement 2

No. of units in ending inventory = 1780 units – 1455 units = 325 units.

• Requirement 3

--FIFO Perpetual as per format provided

Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of Goods Sold	# of units	Cost per unit	Inventory Balance
Jan-01						600	$35	$21,000
Feb-10	300	$32				600	$35	$21,000
						300	$32	$9,600
						900		$30,600
Mar-13	150	$20				600	$35	$21,000
						300	$32	$9,600
						150	$20	$3,000
						1,050		$33,600
Mar-15			600	$35	$21,000	175	$32	$5,600
			125	$32	$4,000	150	$20	$3,000
						325		$8,600
Aug-21	190	$40				175	$32	$5,600
						150	$20	$3,000
						190	$40	$7,600
						515		$16,200
Sep-05	540	$37				175	$32	$5,600
						150	$20	$3,000
						190	$40	$7,600
						540	$37	$19,980
						1,055		$36,180
Sep-10			175	$32	$5,600	325	$37	$12,025
			150	$20	$3,000
			190	$40	$7,600
			215	$37	$7,955
	1,180		1,455		$49,155	325		$12,025

--LIFO

--Weighted Average

--Specific Identification

Specific Identification	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	600	$35	$21,000	600	$35	$21,000	0	$35	$0
Purchases:
10-Feb	300	$32	$9,600	200	$32	$6,400	100	$32	$3,200
13-Mar	150	$20	$3,000	150	$20	$3,000	0	$20	$0
21-Aug	190	$40	$7,600	140	$40	$5,600	50	$40	$2,000
05-Sep	540	$37	$19,980	365	$37	$13,505	175	$37	$6,475
TOTAL	1780		$61,180	1455		$49,505	325		$11,675

• Requirement 4

	FIFO	LIFO	Weighted Average	Specific Identification
Sales	$1,160,000	$1,160,000	$1,160,000	$1,160,000
Less: Cost of Goods Sold	$49,155	$49,805	$49,480	$49,505
Gross Profits	$1,110,845	$1,110,195	$1,110,520	$1,110,495