Question

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units sold at Retail Mar. 1 Beginning inventory 240 units @ $53.80 per unit Mar. 5 Purchase 295 units @ $58.89 per unit Mar 9 Sales 400 units @ $88.80 per unit Mar. 18 Purchase 155 units @ $63.80 per unit Mar. 25 Purchase 290 units@ $65.80 per unit Mar. 29 Sales 278 units @ $98.80 per unit Totals 980 units 670 units

Answer 1

Answer 1) Calculation of cost of goods available for sale and number of units available for sale Cost of Goods Available for Sale Number of Units Cost per unit S 53.80 Cost of goods available for sale S 12,912.00 240 295 Beginning Inventory Purchases: Mar's Mar'18 Mar 25 Total 155 290 980 S S S 58.80 63.80 65.80 S S S $ 17,346.00 9,889.00 19,082.00 59,229.00 Answer 2) Calculation of number of units in ending inventory Number of units in ending inventory = Number of units in beginning inventory + (Number of units purchased on Mar 5 + Number of units purchased on Mar 18 + Number of units purchased on Mar 25) - (Number of units sold on Mar 9 - Number of units sold on Mar 29) = 240 units + (295 units + 155 units + 290 units) – (400 units + 270 units) = 310 units Therefore the company had 310 units in ending inventory.

Answer 3) Gross Margin Calculation of Gross Profits under different methods Specific FIFO LIFO Avg. Cost Identification S S S S 62,196 62,196 62,196 62, 196 S S S S 38,871 40,761 39,664 40,381 $ $ $ $ 23,325 21,435 22,532 21,815 Sales Less: Cost of goods sold Gross Profit Working Note: Calculation of total sales Date Mar'9 Mar 29 Total Quantity 400 270 Selling price per Unit (In $) 88.80 98.80 Total Sales(In $) 35,520.00 26,676.00 62, 196.00 670

Calculation of cost of goods sold under FIFO Method perpetual inventory system Purchase Cost of goods sold Balance Inventory Cost per Total Cost Unit (In S) (In $) Cost per Total Cost Unit (In S) (In $) Cost per Unit (In S) Quantity Quantity Date Mar'i Mar's 295 Total Cost (In $) 12,912.00 12,912.00 17,346.00 7,938.00 58.80 Quantity 240 240 295 135 17,346.00 53.80 53.80 58.80 58.80 Mar'9 240 53.80 58.80 12,912.00 9,408.00 160 Mar 18 155 63.80 9,889.00 Mar 25 290 65.80 19,082.00 135 155 135 155 290 58.80 63.80 58.80 63.80 65.80 63.80 65.80 7,938.00 9,889.00 7,938.00 9,889.00 19,082.00 1,276.00 19,082.00 20,358.00 Mar 29 135 135 58.80 63.80 7,938.00 8,613.00 38,871.00 20 290 310 Total 740 46,317.00 670 FIFO Method: Cost of Goods sold = $ 38,871

Calculation of cost of goods sold under LIFO Method perpetual inventory system Purchase Cost of goods sold Balance Inventory Cost per Unit (Ins) Total Cost (In S) Cost per Total Cost Unit (In S) (In S) Quantity Quantity Date Mar'1 Mar's Cost per Unit (In S) 53.80 53.80 58.80 53.80 Total Cost (In $) 12,912.00 12,912.00 17,346.00 7,263.00 295 Quantity 240 240 295 135 58.80 17,346.00 Mar'9 295 105 58.80 53.80 17,346.00 5,649.00 Mar 18 155 63.80 9,889.00 Mar 25 290 65.80 19,082.00 135 155 135 155 290 135 155 20 310 53.80 63.80 53.80 63.80 65.80 7,263.00 9,889.00 7,263.00 9,889.00 19,082.00 7,263.00 9,889.00 1,316.00 18,468.00 Mar 29 270 65.80 17,766.00 53.80 63.80 65.80 Total 740 46,317.00 670 40,761.00 LIFO Method: Cost of Goods sold = $ 40,761

Calculation of cost of goods sold under average cost Method perpetual inventory system + Purchase Cost of goods sold Balance Inventory Cost per Unit (In $) Total Cost (In $) Cost per Unit (In S) Total Cost (In S) Quantity Quantity Date Mar'i Mar's 295 58.80 17,346.00 Quantity 240 240 295 535 135 135 155 290 400 56.56 22,622.80 Mar'9 Mar'18 Cost per Unit (In $) 53.80 53.80 58.80 56.56 56.56 56.56 63.80 60.43 60.43 65.80 63.11 63.11 155 63.80 9,889.00 Total Cost (In $) 12,912.00 12,912.00 17,346.00 30,258.00 7,635,20 7,635.20 9,889.00 17,524.20 17,524.20 19,082.00 36,606.20 19,565.38 19,565.38 Mar 25 290 65.80 19,082.00 290 290 580 310 270 63.11 Mar 29 Total 17,040.82 39,663.62 740 46,317.00 670 310 Average Cost Method: Cost of Goods sold = $ 39,664 (rounded off)

Calculation of cost of goods sold under Specific Identification Method perpetual inventory system Purchase Cost of goods sold Balance Inventory Cost per Unit (In S) Total Cost (In $) Cost per Total Cost Unit (In $)(In $) Date Quantity Quantity Mar'i Mar's 295 58.80 17,346.00 Quantity 240 240 295 105 Mar9 135 265 53.80 58.80 7,263.00 15,582.00 Mar 18 155 63.80 9,889.00 Cost per Unit (In S) 53.80 53.80 58.80 53.80 58.80 53.80 58.80 63.80 53.80 58.80 63.80 65.80 53.80 58.80 63.80 65.80 Total Cost (In $) 12,912.00 12,912.00 17,346.00 5,649.00 1,764.00 5,649.00 1,764.00 9,889.00 5,649.00 1,764.00 9,889.00 19,082.00 5,649.00 1,764.00 2,552.00 8,883.00 18,848.00 Mar 25 290 30 105 30 155 105 30 155 290 105 30 40 135 310 65.80 19,082.00 Mar 29 63.80 115 155 7,337.00 10,199.00 65.80 Total 740 46,317.00 670 40,381.00 Specific Identification Method: Cost of Goods sold = $ 40,381