AFM123 : Inventory Costing - SOLUTION.pdf
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Periodic Inventory Method | |||||||||
Better Bottles, Inc. uses a PERIODIC inventory system and has the following information available: | |||||||||
Description | # of Units | Cost per Unit | Total Cost | ||||||
Beginning inventory | 20 | $20.00 | $400 | ||||||
Jan 5 sold | 15 | ||||||||
Jan 15 purchase | 27 | $22.00 | 594 | ||||||
Jan 18 sold | 21 | ||||||||
Jan 20 purchase | 33 | $30.00 | 990 | ||||||
Total goods available for sale | 80 | $1,984 | |||||||
Total goods sold | 36 | ||||||||
Required: | |||||||||
1 | Calculate both Cost of goods sold and Ending inventory using the Periodic FIFO Method. | ||||||||
2 | Calculate both Cost of good sold and Ending Inventory using Periodic LIFO Method. | ||||||||
3 | Use your calculations from 1-2 and complete the Income Statement. | ||||||||
The company income tax rate: | 0.25 | ||||||||
1 | FIFO Cost of Goods Sold - PERIODIC | ||||||||
Units Sold Taken From: | # of Units | Cost per Unit | Total Cost | ||||||
Total Cost of Goods Sold FIFO | |||||||||
FIFO Ending Inventory - PERIODIC | |||||||||
Inventory Available | # of Units | Cost per Unit | Total Cost | ||||||
Beginning inventory | |||||||||
+Purchase | |||||||||
+Purchase | |||||||||
(Less Cost of Goods Sold) | |||||||||
Ending Inventory FIFO | |||||||||
2 | LIFO Cost of Goods Sold - PERIODIC | ||||||||
Units Sold Taken From: | # of Units | Cost per Unit | Total Cost | ||||||
Total Cost of Goods Sold LIFO | |||||||||
LIFO Ending Inventory - PERIODIC | |||||||||
Inventory Available | # of Units | Cost per Unit | Total Cost | ||||||
Beginning inventory | |||||||||
+Purchase | |||||||||
+Purchase | |||||||||
(Less Cost of Goods Sold) | |||||||||
Ending Inventory LIFO | |||||||||
3 | Income Statement - Periodic Inventory Method | ||||||||
FIFO | LIFO | ||||||||
Sales revenue, net | 25,000 | 25,000 | |||||||
Cost of goods sold | |||||||||
Gross profit | |||||||||
Operating expenses | 8,000 | 8,000 | |||||||
Operating income before tax | |||||||||
Income tax expense | |||||||||
Net income | |||||||||
Assume that Dunk Coffee Shop completed the following periodic inventory transactions for a line of merchandise​ inventory:
Jun. | 1 | Beginning merchandise inventory | 25 | units @ | $22 | each |
12 | Purchase | 3 | units @ | $24 | each | |
20 | Sale | 14 | units @ | $34 | each | |
24 | Purchase | 17 | units @ | $28 | each | |
29 | Sale | 20 | units @ | $34 | each |
1. | Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the FIFO inventory costing method. |
2. | Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the LIFO inventory costing method. |
3. | Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the​ weighted-average inventory costing method.​ (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest​ dollar.) |
QUESTION: Compute ending merchandise​ inventory, cost of goods​ sold, and gross profit using the​ (1) FIFO inventory costing​ method, (2) LIFO inventory costing​ method, and​ (3) weighted-average inventory costing method.​ (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest​ dollar.)
Begin by determining ending merchandise inventory and cost of goods sold under each of the three methods.
Requirement 1. | ||
FIFO | ||
Plus: | ||
Less: | ||
Cost of goods sold |
Requirement 2. |
LIFO |
Requirement 3. |
Weighted-Average |
Now compute the gross profit under each inventory costing method.
Requirement 1. | ||
FIFO | ||
Sales Revenue | ||
Cost of Goods Sold | ||
Gross Profit |
Requirement 2. |
LIFO |
. |
Requirement 3. |
Weighted-Average |