Question

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Units Sold at Retail Units Acquired at Cost 200 units @ $53.00 per unit 275 units@ $58.00 per unit Date Activities Mar. 1 Beginning inventory Mar. 5 Purchase Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar. 29 Sales Totals 360 units @ $88.00 per unit 135 units @ $63.00 per unit 250 units @ $65.00 per unit 230 units @ $98.00 per unit 590 units 860 units Required: 1. Compute cost of goods available for sale and the number of units available for sale. Cost of Goods Available for Sale # of units Cost per Cost of Goods Available Unit for Sale Beginning inventory Purchases: March 5 March 18 March 25 Total

Answer 1

1) computation of cost of goods available for sale and number of units available for sale :

	cost of goods available for sale
	# of units	cost per unit in $	cost of goods available for sale in $
beginning inventory	200	53.00	10600
purchases :
march 5	275	58.00	15950
march 18	135	63.00	8505
march 25	250	65.00	16250
total	860		51305

2) computation of number of units in ending inventory :

total number of units available for sale	860
less : total nuber of unit sold	-590
number of units in ending inventory	270

3) computation of cost assigned to ending inventory using :

a) fifo method

	goods purchased	cost of goods sold	inventory balance
date	# of units	cost per unit in $	# of units	cost per unit in $	cost of goods sold in $	# of units	cost per unit in $	inventory balance in $
march 1						200	53.00	10600
march 5	275	58.00				200	53.00	10600
						275	58.00	15950
march 9			200	53.00	10600	115	58.00	6670
			160	58.00	9280
march 18	135	63.00				115	58.00	6670
						135	63.00	8505
march 25	250	65.00				115	58.00	6670
						135	63.00	8505
						250	65.00	16250
march 29			115	58.00	6670	20	63.00	1260
			115	63.00	7245	250	65.00	16250
total of cost of goods sold and ending inventory			590		33795	270		17510

b) lifo method

	goods purchased	cost of goods sold	inventory balance
date	# of units	cost per unit in $	# of units	cost per unit in $	cost of goods sold in $	# of units	cost per unit in $	inventory balance in $
march 1						200	53.00	10600
march 5	275	58.00				200	53.00	10600
						275	58.00	15950
march 9			275	58.00	15950	115	53.00	6095
			85	53.00	4505
march 18	135	63.00				115	53.00	6095
						135	63.00	8505
march 25	250	65.00				115	53.00	6095
						135	63.00	8505
						250	65.00	16250
march 29			230	65.00	14950	115	53.00	6095
						135	63.00	8505
						20	65.00	1300
total of cost of goods sold andending inventory			590		35405	270		15900

c) weighted avearge method

	goods purchased	cost of goods sold	inventory balance
date	# of units	cost per unit in $	# of units	cost per unit in $	cost of goods sold in $	# of units	cost per unit in $	inventory balance in $
march 1						200	53.00	10600
march 5	275	58.00				475	(10600 + 15950)/475 = 55.90	26550
march 9			360	55.90	20124	115	55.90	6426
march 18	135	63.00				250	(6426 + 8505)/250 = 59.72	14931
march 25	250	65.00				500	(14931 + 16250)/500 = 62.36	31181
march 29			230	62.36	14343	270	62.36	16838
total of cost of goods sold andending inventory			590		34467	270		16838

d) specific identification method

	goods purchased	cost of goods sold	inventory balance
date	# of units	cost per unit in $	# of units	cost per unit in $	cost of goods sold in $	# of units	cost per unit in $	inventory balance in $
march 1						200	53.00	10600
march 5	275	58.00				200	53.00	10600
						275	58.00	15950
march 9			115	53.00	6095	85	53.00	4505
			245	58.00	14210	30	58.00	1740
march 18	135	63.00				85	53.00	4505
						30	58.00	1740
						135	63.00	8505
march 25	250	65.00				85	53.00	4505
						30	58.00	1740
						135	63.00	8505
						250	65.00	16250
march 29			95	63.00	5985	85	53.00	4505
			135	65.00	8775	30	58.00	1740
						40	63.00	2520
						115	65.00	7475
total of cost of goods sold andending inventory			590		35065	270		16240

cost assigned to ending inventory
a) fifo method	17510
b) lifo method	15900
c) weighted average method	16838
d) specific identification method	16240

4) computation of gross profit earned by company for each of the four costing method :

gross margin	fifo	lifo	weighted average	sepecific identification
sales	54220	54220	54220	54220
less : cost of goods sold	-33795	-35405	-34467	-35065
gross profit	20425	18815	19753	19155

calculation of sales :

march 9	360 units x $88 per unit = $31680
march 25	230 units x $98 per unit = $22540
total sales	$54220

thank you

please give your feed back and rating