Bristol Sales had the following transactions for DVDs in 2012, its first year of
ID: 2384118 • Letter: B
Question
Bristol Sales had the following transactions for DVDs in 2012, its first year of operations.Jan. 20 Purchased 75 units @ $17 = $1,275
Apr. 21 Purchased 450 units @ $19 $8,550
July 25 Purchased 200 units @ $23 $4,600
Sept. 19 Purchased 100 units @ $29 =$2,900
During this year, Bristol Sales sold 775 DVDs for $60 each.
Required:
A. Compute the amount of ending inventory Bristol would report on the balance sheet, assuming the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average.
B. Record the above transactions in general journal form and post to T-accounts using (1) FIFO, (2) LIFO, and (3) weighted average. Use a seperate 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
Date
purchase
cash
Jan. 20
Purchased 75 units @ $17
$1,275
Apr. 21
450 units @ $19
$8,550
July 25
200 units @ $23
$4,600
Sept. 19
100 units @ $29
$2,900
DVD Inventory = DEBIT = 17,325
FIFO----------COST OF GOODS SOLD
17x 75
$1275
19 x 450
$ 8,550
23 x200
$4,600
29 x 50
$ 1,450
TOTAL COST
15,875
LIFO----------COST OF GOODS SOLD
29 x 100
$2900
23 X200
$ 4600
19X450
$8550
17x 25
$ 425
TOTAL COST
16 475
LIFO----------COST OF GOODS SOLD: $16 475
WEIGHTED AVERAGE
17325/825= $21 PER DVD
$21 PER DVD X775= $ 16 275
Date
purchase
cash
Jan. 20
Purchased 75 units @ $17
$1,275
Apr. 21
450 units @ $19
$8,550
July 25
200 units @ $23
$4,600
Sept. 19
100 units @ $29
$2,900
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