Question

1) Tristan's Tacos began the month with 5 cases of tortilla chips, each with a value of $20 per case. On June 10,3 more cases of tortilla chips were purchased at $22 per case. At the end of June, there was 1 case of tortillas left in the warehouse. Determine the value of ending inventory and CGS for the month of June using the FIFO method. 2) Aloha Acai had 4 tubs of frozen yogurt to begin the month of July. The value of the beginning inventory was $60 total (for all 4 tubs). On July 9, 2 tubs were purchased at $16 per tub. On July 25, 5 more tubs were purchased for $18 per tub. 3 tubs were left in inventory at the end of the month of July. Calculate the value of ending inventory and CGS using the FIFO and LIFO methods. 3) Tahnee's Cocktail Treats had a beginning inventory of 5 bottles of tequila in beverage inventory. Each of those bottles had a value of $40 per bottle. Tahnee's made a purchase of 3 bottles of tequila for $42 per bottle and another purchase of 8 bottles for $36 per bottle. 10 bottles were used up during the month to make cocktails. (Hint: insert 10 bottles for CGS in the units column and calculate ending inventory in units). Then determine the value of ending inventory and CGS using the FIFO, LIFO, and WA methods. 4) Lindsay's Laai had the following account totals at the end of August. Prepare an income statement in gross margin format. Note: some information will not be needed to complete the statement. Rent expense = 1200, marketing expense, 500, food inventory 3500, food sales 5000, CGS Food 2000, Salaries payable 1000, food sales paid with credit card 4000, cash 2500, salaries expense 1000.

Answer 1

1.cost of goods sold for the month of june=

opening inventory + purchases- closing inventory

= (5*20)+(3*22)-(1*22)

=100+66-22

=$144

closing inventory for the month of june under fifo method-

under fifo method it is assumed that closing inventory consist of items purchased last.so the closing inventory is calculated on the basis of recent cost($22)

=1unit *$22

= $22

2.Ending inventory for the month of july of Aloha Acai

under fifo method

3units at the rate of 18 per unit

= 3*18

=$54

under fifo method last purchase cost is assumed to be the inventory cost

under lifo method

3 units at the rate of 15(60÷4) per unit

= 3*15

=$45

under lifo method the closing inventory will be valued at earlier cost

Cost of goods sold of Aloha Acai for the month of july

under fifo method

=opening stock + purchase- closing stock

=(15*4) + {(16*2)+(18*5)} - (3*18)

=60+122-54

=$128

under lifo method

=opening stock + purchase- closing stock

=(15*4)+{(16*2)+(18*5)} - (3*15)

=60+122-45

=$137

3.Ending inventory in units

=opening stock + purchase- CGS

=5+(3+8)-10

=6units

value of ending inventory and CGS under:

a) fifo method

Ending inventory = 6units * 36

=$216

CGS= opening stock + purchase- closing stock

=(5*40)+{(3*42)+(8*36)}-(6*36)

=200+(126+288)-216

=$398

b)lifo method

Ending inventory = (5*40)+(1*42)

=$242

ending inventory is assumed as the earlier stocknin lifo

CGS=opening stock + purchase- closing stock

= 200+(126+288)-242

=$372

c) weighted average

weighted average cost per unit=

total cost of unit÷no. of units

5*40=200

3*42=126

8*36=288

Total cost=$614

Total no. of units=16

weighted average cost =614÷16

=$38.375

Ending inventory=38.375*6

=$230.25

CGS=opening stock + purchase- closing stock

=200+(126+288)-230.25

=$383.75

4.Income and expenditure statement

Income

food sales 5000

Total 5000

Expense

Cost of food 2000

Rent 1200

Marketing 500

salaries 1000

Total 4700

Gross profit $300 (5000-4700)

it is assumed that food sales with credit card is included in the food sales amount, otherwise it is added with food sales.