Question

Homework Question: - Fahed Co incurred the following transactions during the month of December 2019. December 1: Beginning Inventory (100 units @ 5 per unit). December 6: Purchased 50 units @ 5.50 per unit. December 10: Purchased 30 units @ 5.25 per unit. December 13: Sold 130 units @ 12 per unit. December 15 Sold 45 units @ 12.50 per unit December 19 Purchased 120 units @ 4.75 per unit. December 22: Sold 80 units @ 12.25 per unit. December 25 Sold 30 units @ 13 per unit. December 30: Purchased 90 units @ 5.75 per unit. December 31: Sold 80 units @ 11.50 per unit. Required: You have to use "Average" and "FIFO" methods and calculate the following: i. Calculate cost of ending inventory on December 31", 2019 ii. Calculate cost of goods sold for the period ending on December 31", 2019 iii. Calculate gross profit for the period ending on December 31", 2019.

Answer 1

On Average Cost basis :

Date	Opening			Purchased			Sale			Closing
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
12/1/2019	100	5	500							100	5	500
12/6/2019	100	5	500	50	5.5	275				150	5.17	775
12/10/2019	150	5.17	775	30	5.25	157.5				180	5.18	932.5
12/13/2019	180	5.18	932.5				130	5.18	673.472	50	5.18	259.028
12/15/2019	50	5.18	259.028				45	5.18	233.125	5	5.18	25.9028
12/19/2019	5	5.18	25.9028	120	4.75	570				125	4.77	595.903
12/22/2019	125	4.77	595.903				80	4.77	381.378	45	4.77	214.525
12/25/2019	45	4.77	214.525				30	4.77	143.017	15	4.77	71.5083
12/30/2019	15	4.77	71.5083	90	5.75	517.5				105	5.61	589.008
12/31/2019	105	5.61	589.008				80	5.61	448.768	25	5.61	140.24
									1879.76
		Cost of ending inventory				140.24
		Cost of goods sold				1879.8
		G.P.	(sale-cogs)			4412.5-1879.8 =			2532.7

On FIFO Basis

Date	Opening			Purchased			Sale			Closing
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Dec	100	5.00	500							100	5.00	500
6-Dec	100	5.00	500							100	5.00	500
				50	5.50	275				50	5.50	275
10-Dec	100	5.00	500							100	5.00	500
	50	5.50	275							50	5.50	275
				30	5.25	157.5				30	5.25	157.5
13-Dec	100	5.00	500				100	5.00	500	0	0.00	0
	50	5.50	275				30	5.50	165	20	5.50	110
	30	5.25	157.5							30	5.25	157.5
15-Dec	20	5.50	110				20	5.50	110	0	0.00	0
	30	5.25	157.5				25	5.25	131.25	5	5.25	26.25
19-Dec	5	5.25	26.25							5	5.25	26.25
				120	4.75	570				120	4.75	570
22-Dec	5	5.25	26.25				5	5.25	26.25	0		0
	120	4.75	570				75	4.75	356.25	45	4.75	213.75
25-Dec	45	4.75	213.75				30	4.75	142.5	15	4.75	71.25
30-Dec	15	4.75	71.25							15	4.75	71.25
				90	5.75	517.5				90	5.75	517.5
31-Dec	15	4.75	71.25				15	4.75	71.25	0	0.00	0
	90	5.75	517.5				65	5.75	373.75	25	5.75	143.75
									1876.25
			Cost of ending inventory					143.8
			Cost of goods sold					1876
			G.P.					4412.5 - 1876 =			2537