Montoure Company uses a periodic inventory system. It entered into the following

Question

Montoure Company uses a periodic inventory system. It entered into the following calendar-year 2015 purchases and sales transactions. Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 700 units $40.00 per unit Feb. 10 Purchase 450 units S37.00 per unit Mar. 13 250 units S22.00 per unit Mar. 15 Sales 850 units a S70.00 per unit Aug. 21 Purchase 200 units $45.00 per unit Sept. 5 Purchase Sept. 10 600 units S41.00 per unit 800 units@ S70.00 per unit Totals 2,200 units. 1.850 units. Required 1. 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 5ale lunit5 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 (d) specific identification. For specific identification units sold consist of 700 units from beginning inventory, 250 from the February 10 purchase, 250 from the March 13 purchase, 100 from the August 21 purchase, and 350 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.) Ending Inventory (a) FIF (b) LIFO (c) Weighted average (d) Specific identification 4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.) Weighted Average Identification Sales Less: Cost of goods sold Gross profit

Explanation / Answer

Answer no. (1)

Note : Cost of goods available for sale = Beggining Inventory + Purchase

Answer no . (2)

Answer no . (3)

(a) FIFO Method ( First in First Out )

Hence

Value of Ending Inventory = $22550

(b) LIFO Method ( Last In First Out )

Hence

Value of Ending Inventory = $22000

(c) Weighted Average

Average Cost = $50150 / 1400 =$35.82

On March 15 , 850 units sold , hence remaining units left 550units @ $35.82 .

Now,

Average cost per unit = $53301.79 / 1350 =$39.48

on Sept 10 ., 800 units Sold , Hence Remaining units = 1340 - 800 =550 units@ $39.48

Value of Ending Inventory =$21715.54

(d) Specific Identification Method

Hence

Value of Ending Inventory = $22150

Answer (4)

Note (1) : FIFO Method : Cost of Good Sold

Hence cost of Good Sold = $61200

Note 2 : Cost of Good Sold under LIFO Method

Hence

cost of Good Sold = $61750

Note 3 : Cost of Good Sold under Weighted Average Method

Hence ,

Cost of Good Sold = $ 62034

Note 4 : Cost of Good Sold under Specification method

Hence

Cost of Good Sold = $61600

Cost of Goods available for sale Beginning Inventory 700 units @ $40 $        28,000 10-Feb 450 units @ $37 $        16,650 13-Mar 250 units@ $22 $          5,500 21-Aug 200 units @ $45 $          9,000 5-Sep 600 units @ $41 $        24,600 Total $        83,750

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