Dugan Sales had the following transactions for jackets in 2013, its first year o

Question

Dugan Sales had the following transactions for jackets in 2013, its first year of operations: Jan 20      Purchased 80 units @ 15   = $1200 Apr 21       Purchased 420 units @ 16   = 6,720 July 25      Purchased 250 units @ 20 = 5,000 Sept 19     Purchased 150 Units @22   = 3,300 During the year Dugan Sales sold 830 jackets for $40 each. a. Compute the amount of ending inventory Dugan would report on the balance sheet, Assuming the following cost flow assumptions: (1) FIFO (2) LIFO ans (3) weighted Average b. Record the above transactions in general journal form and post T-accounts using (1) FIFO, (2) LIFO (3) weighed average. Use a separate set of journal entries and T- accounts for each method. assume all transactions are cash transactions. c. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions Jan 20      Purchased 80 units @ 15   = $1200 Apr 21       Purchased 420 units @ 16   = 6,720 July 25      Purchased 250 units @ 20 = 5,000 Sept 19     Purchased 150 Units @22   = 3,300 During the year Dugan Sales sold 830 jackets for $40 each. a. Compute the amount of ending inventory Dugan would report on the balance sheet, Assuming the following cost flow assumptions: (1) FIFO (2) LIFO ans (3) weighted Average b. Record the above transactions in general journal form and post T-accounts using (1) FIFO, (2) LIFO (3) weighed average. Use a separate set of journal entries and T- accounts for each method. assume all transactions are cash transactions. c. Compute the difference in gross margin between the FIFO and LIFO cost flow assumptions

Explanation / Answer

a) FIFO=1540=70*22

LIFO =70*15=1050

Weighted average=16220/900*70=1261.55

c)1540-1050=490

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