Montoure Company uses a perpetual inventory system. It entered into the followin

Question

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. Units Sold at Retail Date a 1 Beginning inventory Activities Units Acquired at Cost 688 units$48 per unit 328 units $35 per unit 188 units$23 per unit Feb. 18 Purchase Mar. 13 Purchase Mar. 15 Sales Aug. 21 Purchase Sept. 5 Purchase Sept. 18 Sales 728 units $75 per unit 138 units$45 per unit 498 units$41 per unit 628 units $75 per unit 1.348 units Totals 1,728 units Requlrec 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 (c) specific identification. For specific identification, units sold consist of 680 units from beginning inventory, 220 from the February 10 purchase, 100 from the March 13 purchase, 80 from the August 21 purchase, and 260 from the September 5 purchase. (Round your average cost per unlt to 2 declmal places.) 4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unlt to 2 declmal places.) Complete this question by entering your answers in the tabs below Required 1Required 2 Required 3 Required 4 Compute cost of goods available for sale and the number of units available for sale Cost of goods available for sale Number of units available for sale units Required 2>

Explanation / Answer

Cost of goods available for sale:

amount

$

amount

$

* cost of goods available for sale = value of begning inventory + total value of purchases during the period.

Number of units available for sale:

no. units in begning inventory + no.units purchased during the period

680 + [ 320 +100+ 130 +490 ]

680 + 1040 = 1720 units

2. units available for sale 1720 units

units sold 1340 units

units in ending inventory 380 units

[1720 - 1340 ]

3.Calculation of cost assigned to ending inventory:

(a) FIFO METHOD

unit cost

$

total

$

balance

$

(b) LIFO METHOD

unit cost

$

total

$

balance

$

(c) weighted average cost method

unit cost

$

total

$

balance

$

weighted average rate:

[ 680 units * 40 $ ] + [40 units * 35 $ ] / 720 units

= 40 $

weighted average rate:

[ 280 units * 35 $ ] + [100 units * 23 $ ] + [130 units * 45 $]+[250 units * 41 $ ] / 620 units

= 45 $

(d) specific identification method

cost of goods sold

680 units * 40 $ = 27,200

220 units * 35 $ =7700

100 units * 23 $ = 2300

80 units * 45 $ = 3600

260 units * 41$ = 10,660

total cost of goods sold = 51,460 $

4. Calculation of gross profit earned

sales

[1340 units * 75$ ]

particulars

amount

$

amount

$

Begning inventory [ 680 units * 40 $ ] 27,200 add: purchases [320 units * 35 $ ] 11,200 add: purchases [100 units* 23 $ ] 2,300 add: purchases [130 units * 45 $ ] 5,850 add: purchases [490 units * 41 $ ] 20,090 cost of goods available for sale 66,640

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