Question

During September, KM company sells 9,800 watches for $300.00 each. The company has the following inventory purchase transactions for September:

Date	Transaction	# of units	Unit Cost	Total Cost
1-Sep	Beginning inventory	300	$195.00	$58,500
4-Sep	Purchase	6,000	$198.00	1,188,000
24-Sep	Purchase	3,700	$200.00	740,000
		10,000		$1,986,500

1. Calculate the cost of goods sold (FIFO)

2. Calculate the gross profit

3. Calculate cost of goods sold (LIFO)

4. Calculate gross profit (LIFO)

5. Calculate ending inventory (WA)

6. Calculate cost of goods sold (WA)

7. Calculate gross profit (WA)

Answer 1

1) FIFO:	Units (a)	Rate (b)	Amount (a * b)
Cost of Goods sold:
Beginning inventory	300	$195	$58,500
4th Sep. Purchases	6,000	$198	$1,188,000
24th Sep. Purchases (9,800 - 300 - 6,000)	3,500	$200	$700,000
Total cost of goods sold under FIFO	9,800		$1,946,500
2)
Sales Revenue	9,800	$300	$2,940,000
Less: Total cost of goods sold under FIFO			($1,946,500)
Gross Profit under FIFO			$993,500
3) LIFO:
Cost of Goods sold:
24th Sep. Purchases	3,700	$200	$740,000
4th Sep. Purchases	6,000	$198	$1,188,000
Beginning Inventory (9,800 - 3,700 - 6,000)	100	$195	$19,500
Total cost of goods sold under LIFO	9,800		$1,947,500
4)
Sales Revenue	9,800	$300	$2,940,000
Less: Total cost of goods sold under LIFO			($1,947,500)
Gross Profit under LIFO			$992,500
5) Weighted Average (AW):
Beginning inventory	300	$195	$58,500
4th Sep. Purchase	6,000	$198	$1,188,000
24th Sep. Purchase	3,700	$200	$740,000
Totals	10,000		$1,986,500
Weighted average cost per unit ($1,986,500/10,000 unis)		$198.65
Ending Inventory (10,000 - 9,800 = 200)	200	$198.65	$39,730.00
6)
Cost of Goods Sold under WA	9,800	$198.65	$1,946,770
7)
Sales Revenue	9,800	$300	$2,940,000
Less: Total cost of goods sold under WA			($1,946,770)
Gross Profit under WA			$993,230