Question

Assume that

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Coffee Shop completed the following periodic inventory transactions for a line of merchandise​ inventory:

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Requirements

1.	Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the FIFO inventory costing method.
2.	Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the LIFO inventory costing method.
3.	Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the​ weighted-average inventory costing method.​ (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest​ dollar.)

Requirements​ 1., 2., and 3. Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the​ (1) FIFO inventory costing​ method, (2) LIFO inventory costing​ method, and​ (3) weighted-average inventory costing method.​ (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest​ dollar.)

Begin by determining ending merchandise inventory and cost of goods sold under each of the three methods.

		Requirement 1.
		FIFO
Beginning merchandise inventory		437
Plus:	Net purchases	231
Cost of goods available for sale		668
Less:	Ending merchandise inventory
Cost of goods sold

Jun.	1	Beginning merchandise inventory	23	units @	$19	each
	12	Purchase	9	units @	$21	each
	20	Sale	12	units @	$32	each
	24	Purchase	19	units @	$23	each
	29	Sale	21	units @	$32	each

Answer 1

Correct Answer:

	FIFO	LIFO	Weighted Average
Sales Revenue	$ 1,056.00	$ 1,056.00	$ 1,056.00
Cost of goods sold	$ 649.00	$ 721.00	$ 686.40
Gross profit	$ 407.00	$ 335.00	$ 369.60

	FIFO	LIFO	Weighted Average
Cost of Goods Sold	$ 649	$ 721	$ 686
Ending Inventory	$ 414	$ 342	$ 377

Working:

Sales Revenue = (12+21)*32

= 33*32

= $1,056

Cost of Goods Available for sale
		Units	Cost per unit	value
Beginning Inventory		23	$                         19.00	$                       437.00
Purchases
12-Jun		9	$                         21.00	$                       189.00
24-Jun		19	$                         23.00	$                       437.00
Total		51		$                   1,063.00

Weighted Average Cost Per unit
Units		(A)	51
Total Cost		(B)	$                   1,063.00
Average Cost		(C=B/A)	$                           20.8

	FIFO
A	Total Units Available for sale			51		$            1,063.00
	Units Sold			33
	Ending Inventory Units			18
	Valuation
	Cost of Goods Sold		23		$                         19.00	$                437.00
			9		$                         21.00	$                189.00
			1		$                         23.00	$                  23.00
						$                         -
						$                         -
						$                         -
B	Cost of Goods Sold		33	units		$                649.00
A-B	Ending Inventory		18	units		$                414.00

	LIFO
A	Total Units Available for sale			51		$            1,063.00
	Units Sold			250
	Ending Inventory Units			-199
	Valuation
	Cost of Goods Sold		19.00		$                         23.00	437.00
			9.00		$                         21.00	189.00
			5.00		$                         19.00	95.00
						-
						-
B	Cost of Goods Sold		33	units		$                721.00
A-B	Ending Inventory		18	units		$                342.00

	Weighted Average
A	Total Units Available for sale			51		$            1,063.00
	Units Sold			33
	Ending Inventory Units			18
	Valuation
	Cost of Goods Sold		33		$                         20.80	$                686.40
						$                         -
B	Cost of Goods Sold		33	units		$                686.40
A-B	Ending Inventory		18	units		$                376.60

End of answer.

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