1.) Determine the amound that would be reported in ending merchandise on May 29
ID: 2331871 • Letter: 1
Question
1.) Determine the amound that would be reported in ending merchandise on May 29 using the FIFO inventory closing method.
2.) Determine the amount that would be reported in ending merchandise inventory on May 29 using the LIFO inventory costing method.
3.) Determine the amount that would be reported in ending merchandise inventory on May 29 using the weighted-average inventory method.
Question Help Assume that JL Tire Store completed the following perpetual inventory transactions for a line of tires: (Click the icon to view the transactions.) Read the requirements Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method. Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory ayers first) Purchases Cost of Goods Sold Inventory on Hand Unit Total Unit Total Unit Total Date QuantityCostCost Quantity Cost CostQuantity Co Cost May 1 23 Enter any number in the edit fields and then continue to the next questionExplanation / Answer
1 Under FIFO method,Goods purchased first are sold first. Purchases Cost of goods sold Inventory on hand Date Quantity Unit cost Total cost Quantity Unit cost Total cost Quantity Unit cost Total cost May 1. 22 53 1166 May 11. 14 71 994 22 53 1166 14 71 994 May 23. 18 53 954 4 53 212 14 71 994 May 26. 10 74 740 4 53 212 14 71 994 10 74 740 May 29. 4 53 212 9 74 666 14 74 1036 1 74 74 Total 2276 Gross profit=Sales-Cost of goods sold Sales=(18*78)+(19*78)=$ 2886 Gross profit=2886-2276=$ 610 Ending inventory= $666 2 Under LIFO method,Goods purchased last are sold first. Purchases Cost of goods sold Inventory on hand Date Quantity Unit cost Total cost Quantity Unit cost Total cost Quantity Unit cost Total cost May 1. 22 53 1166 May 11. 14 71 994 22 53 1166 14 71 994 May 23. 14 71 994 18 53 954 4 53 212 May 26. 10 74 740 18 53 954 10 74 740 May 29. 10 74 740 9 53 477 9 53 477 Total 2423 Gross profit=Sales-Cost of goods sold Gross profit=2886-2423=$ 463 Ennding inventory=$477 3 Under weighted average inventory method,Inventory is valued at weighted average cost per unit Weighted average cost per unit=Total cost/Total quantity Purchases Cost of goods sold Inventory on hand Date Quantity Unit cost Total cost Quantity Unit cost Total cost Quantity Unit cost Total cost May 1. 22 53 1166 May 11. 14 71 994 36 60 2160 (1166+994)/36 May 23. 18 60 1080 18 60 1080 May 26. 10 74 740 28 65 1820 (1080+740)/28 May 29. 19 65 1235 9 65 585 Total 2315 Gross profit=Sales-Cost of goods sold Gross profit=2886-2315=$ 571 Ending inventory= $585 4 FIFO results in the largest gross profit because during the times of increasing inventory prices this method will produce the smallest cost of goods sold
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