Question

PROBLEM SET A Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. (For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.) Problem 6-1A Perpetual: Alternative cost flows P1 Date Activities Units Acquired at Cost Units Sold at Retail 100 units 550.00 per unit 400 units 555.00 per unit 420 units $85.00 per unit Mar. 1 Mar. 5 Mar 9 Mar. 18 Mar 25 Mar 29 Beginning inventory Purchase... Sales Purchase... Purchase. Sales Totals. 120 units @ $60.00 per unit 200 units 562.00 per unit 160 units $95.00 per unit 590 units 820 units Check (3) Ending inventory FIFO, $14,800, LIFO $13,680, WA, 514,352 14) LIFO gross profit, $17.980 Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO. (c) weighted average, and (d) specific identification. (Round all amounts to cents.) 4. Compute gross profit earned by the company for each of the four costing methods in part 3

Answer 1

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Answer1 Computation of Cost of Goods and no. of units available for sale Units Cost per unit Total Cost Beginning Inventory 100 $ 50 $ 5,000 Purchases : Mar 5 400 $ 55 $ 22,000 Mar 18 120 S 60 $ 7,200 Mar 25 200 $ 62 $ 12,400 Total 820 $ 46,600 avg Answer4 Computation of Gross Profit for each cost methods Weighted Specific FIFO LIFO Identification Sales $ 50,900 $50,900 $ 50,900 $ 50,900 Less: Cost of Goods Sold $ 31,800 $32,920 $ 31,511 $ 32,540 Gross Profit $ 19,100 $ 17,980 $ 19,389 $ 18,360 Answer2 Computation of no. of units in ending inventory Units available for sale 820 No. of Units sold 580 Ending inventory units 240 Sales Mar-09 420 units @ 85 Mar-29 160 units @ 95 $ 35,700 $ 15,200 $50,900 Answer3 Computation of cost using different methods a) FIFO Purchase Cost of goods sold Balance Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost Mar-01 100 $ 50 $ 5,000 Mar-05 400 $ 55$ 22,000 100 $ 50 $ 5,000 400 $ 55 $ 22,000 500 Mar-09 100 $ 50 $ 5,000 800 $ 50 $ 4,000 320 $ 55 $ 17,600 420 80 55 4400 Mar-18 120 $ 60 $ 7,200 80 $ 55 $ 4,400 120 $ 60 $ 7,200 200 Mar-25 200 $ 62 $ 12,400 80 $ 55 $ 4,400 1200 $ 60 $ 7,200 200 $ 62 $ 12,400 400 Mar-29 80 $ 55 $ 4,400 40 S 60 $ 2,400 80 $ 60 $ 4,800 200 $ 62 $ 12,400 Total 160 $ 31,800 240 $ 14,800 b) LIFO Purchase Cost of goods sold Balance Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost Mar-01 100 $ 50 $ 5,000 Mar-05 400 $ 55 S 22,000 100 $ 50 $ 5,000 400 $ 55 $ 22,000 500 Mar-09 400 $ 55 $ 22,000 80 $ 50 $ 4,000 20 $ 50 $ 1,000 420 80 55 4400 Mar-18 120 $ 60 $ 7,200 80 $ 50 $ 4,000 120 $ 60 $ 7,200 200 Mar-25 200 $ 62 $ 12,400 80 $ 50 $ 4,000 120 $ 60 $ 7,200 200 $ 62 $ 12,400 400 Mar-29 160 $ 62 $ 9,920 80 $ 50 $ 4,000 120 $ 60 $ 7,200 40 $ 62 $ 2,480 Total 160 $ 32,920 240 $ 13,680 c) weighted avg Purchase Cost of goods sold Balance Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost Mar-01 100 $ 50 $ 5,000 Mar-05 400 $ 55 $ 22,000 100 $ 50 $ 5,000 400 $ 55 $ 22,000 500 $52.50 Mar-09 420 $52.50 $ 22,050 80 $ 52.50 $ 4,200 420 80 $52.50 Mar-18 120 $ 60 $ 7,200 80 $52.50 $ 4,200 120 $ 60 $ 7,200 200 $ 56.25 Mar-25 200 $ 62 $ 12,400 80 $52.50 $ 4,200 120 $ 60 $ 7,200 200 $ 62 $ 12,400 400 $59.13 Mar-29 160 $59.13 $ 9,461 240 $59.13 $ 14,191 Total 580 $ 31,511 240 $ 14,191 d) Specific Identification Purchase Cost of goods sold Balance Date Quantity Rate Total cost Quantity Rate Total cost Quantity Rate Total cost Mar-01 100 $ 50 $ 5,000 Mar-05 400 $ 55 $ 22,000 100 $ 50 $ 5,000 400 $ 55 $ 22,000 500 $ 27,000 Mar-09 80 $ 50 $ 4,000 20 $ 50 $ 1,000 340 $ 55 $ 18,700 60 $ 55 $ 3,300 420 80 $ 4,300 Mar-18 120 $ 60 $ 7,200 20 $ 50 $ 1,000 60 $ 55 $ 3,300 120 $ 60 $ 7,200 200 $ 11,500 Mar-25 200 $ 62$ 12,400 20 $ 50 $ 1,000 600 $ 55 $ 3,300 120 $ 60 $ 7,200 200 $ 62 $ 12,400 400 $ 23,900 Mar-29 40 $ 60 $ 2,400 20 $ 50 $ 1,000 120 $ 62 $ 7,440 60 S 55 $ 3,300 80 $ 60 $ 4,800 80 $ 62 $ 4,960 Total 160 $ 32,540 20 $ 14,060