Note : I posted Question before but the answer is not correct as my teacher said and I posted again please answer correctly
Question: Q4
Flounder Inc. is a retailer using a perpetual inventory system. All sales returns from customers result in the goods being returned to inventory. (Assume that the inventory is not damaged.) Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Flounder Inc. for the month of January.
Date |
Description |
Quantity |
Unit Cost or |
|||||||||
Dec. |
31 |
Ending inventory |
160 |
$19 |
||||||||
Jan. |
2 |
Purchase |
100 |
23 |
||||||||
Jan. |
6 |
Sale |
180 |
38 |
||||||||
Jan. |
9 |
Sale return |
10 |
38 |
||||||||
Jan. |
9 |
Purchase |
75 |
24 |
||||||||
Jan. |
10 |
Purchase return |
15 |
24 |
||||||||
Jan. |
10 |
Sale |
50 |
45 |
||||||||
Jan. |
23 |
Purchase |
100 |
27 |
||||||||
Jan. |
30 |
Sale |
120 |
51 |
(a)
Using Average cost of goods method, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. (Assume sales returns had a cost of $19 and purchase returns had a cost of $24.)
Cost of goods sold |
$ |
|
Ending Inventory |
$ |
|
Gross Profit |
$ |
Cost of goods sold | $7,543.85 |
Ending inventory | $1,964.48 |
Gross profit | $7,286.15 |
Calculations:
Purchases & Purchase returns | Cost of goods sold & Sales returns | Ending inventory | Average | |||||||
Date | Units | Unit cost | Total | Units | Unit cost | Total | Units | U.C | Total | Unit cost |
Dec. 31 | 160 | $19 | $3,040.00 | |||||||
Jan.2 Pur. | 100 | $23.000 | $2,300.00 | 260 | $5,340.00 | $20.538 | ||||
Jan.6 Sal. | 180 | $20.538 | $3,696.92 | 80 | $1,643.08 | $20.538 | ||||
Jan.9 S/R | -10 | $20.538 | ($205.38) | 90 | $1,848.46 | $20.538 | ||||
Jan.9 Pur. | 75 | $24.000 | $1,800.00 | 165 | $3,648.46 | $22.112 | ||||
Jan.10 P/R | -15 | $22.112 | ($331.68) | 150 | $3,316.78 | $22.112 | ||||
Jan.10 SaL. | 50 | $22.112 | $1,105.59 | 100 | $2,211.19 | $22.112 | ||||
Jan.23 Pur. | 100 | $27.000 | $2,700.00 | 200 | $4,911.19 | $24.556 | ||||
Jan.30 Sal. | 120 | $24.556 | $2,946.71 | 80 | $1,964.48 | $24.556 | ||||
Total | 260 | $6,468.32 | 340 | $7,543.85 | 80 | $1,964.48 | $24.556 |
Average unit cost = Total cost ÷ Total units
Sales | |
Jan.6 Sales (180 x $38) | $6,840.00 |
Jan.9 Sales returns (10*$38) | ($380.00) |
Jan.10 Sales (50 x $45) | $2,250.00 |
Jan.30 Sales (120 x $51) | $6,120.00 |
Total | $14,830.00 |
(Less): Cost of goods sold | ($7,543.85) |
Gross profit | $7,286.15 |
Note : I posted Question before but the answer is not correct as my teacher said...
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