Question

Becca’s Publishing Company sells textbooks and has no textbooks in inventory at the beginning of the year. In 2019, your campus bookstore made the following purchases Event # copies Unit cost June Purchases 900 $40 August Purchases 750 $42 December Purchases 1,000 $48 At the end of December 2019, the bookstore has sold 2,400 copies of the text for $70 per copy. a. Using FIFO calculate (show all of your work): Total Sales $___________ Cost of Goods Sold $___________ Gross Profit $___________ Ending Inventory @ 12/31/19 $___________ (5) Gross Profit Rate ____________ b. Using LIFO calculate: Total Sales $____________ Cost of Goods Sold $____________ Gross Profit $____________ Ending Inventory @ 12/31/19 $____________ (5) Gross Profit Rate ____________ c. Using Weighted Average calculate: Total Sales $____________ Cost of Goods Sold $____________ Gross Profit $____________ Ending Inventory @ 12/31/19 $____________ (5) Gross Profit Rate ____________

Answer 1

Purchases:
June = 900 units @ $40 per unit
August = 750 units @ $42 per unit
December = 1,000 units @ $48 per unit

Cost of Goods available for sale = 900 * $40 + 750 * $42 + 1,000 * $48
Cost of Goods available for sale = $115,500

Number of units available for sale = 900 + 750 + 1,000
Number of units available for sale = 2,650

Sales:
2,400 units @ $70 per unit

Sales = 2,400 * $70
Sales = $168,000

Answer a.

Cost of Goods Sold = 900 * $40 + 750 * $42 + 750 * $48
Cost of Goods Sold = $103,500

Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Ending Inventory = $115,500 - $103,500
Ending Inventory = $12,000

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $168,000 - $103,500
Gross Profit = $64,500

Gross Profit Rate = Gross Profit / Sales
Gross Profit Rate = $64,500 / $168,000
Gross Profit Rate = 38.39%

Answer b.

Cost of Goods Sold = 1,000 * $48 + 750 * $42 + 650 * $40
Cost of Goods Sold = $105,500

Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Ending Inventory = $115,500 - $105,500
Ending Inventory = $10,000

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $168,000 - $105,500
Gross Profit = $62,500

Gross Profit Rate = Gross Profit / Sales
Gross Profit Rate = $62,500 / $168,000
Gross Profit Rate = 37.20%

Answer c.

Cost per unit = Cost of Goods available for sale / Number of units available for sale
Cost per unit = $115,500 / 2,650
Cost per unit = $43.585

Cost of Goods Sold = 2,400 * $43.585
Cost of Goods Sold = $104,604

Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Ending Inventory = $115,500 - $104,604
Ending Inventory = $10,896

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $168,000 - $104,604
Gross Profit = $63,396

Gross Profit Rate = Gross Profit / Sales
Gross Profit Rate = $63,396 / $168,000
Gross Profit Rate = 37.74%