Jill Hansen owns Interior Designs, a furniture store. One of her most popular it
ID: 2421609 • Letter: J
Question
Jill Hansen owns Interior Designs, a furniture store. One of her most popular items is a leather recliner.
Following is the recliner inventory activity for August. The recliners on hand at August 1 had a unit cost of $280.
If Interior Designs uses the first-in, first-out (FIFO) inventory method and periodic approach, what values would be assigned to ending inventory, cost of goods sold and gross profit?
If Interior Designs uses the last-in, first-out (LIFO) inventory method and periodic approach, what values would be assigned to ending inventory, cost of goods sold and gross profit?
If Interior Designs uses the weighted-average inventory method and periodic approach, what values would be assigned to ending inventory, cost of goods sold and gross profit?
Date purchases sales units on hand 8/1 Balance fwd. 80 8/4 120 units @ $300 200 8/20 140 units @ $510 60 8/25 180 units @ $340 240 8/29 110 units @ $590 13Explanation / Answer
FIFo Method Income statement Date purchases sales units on hand balance Final balance sales 136300 1-Aug Balance fwd. 80 22400 cost of goods sold 72200 4-Aug 120 units @ $300 200 36000 58400 Profit 64100 20-Aug 140 units @ $510 60 40400 18000 25-Aug 180 units @ $340 240 61200 79200 29-Aug 110 units @ $590 13 35000 44200 LIFO Method Income statement Date purchases sales units on hand balance Final balance sales 136300 1-Aug Balance fwd. 80 22400 cost of goods sold 79000 4-Aug 120 units @ $300 200 36000 58400 Profit 57300 20-Aug 140 units @ $510 60 41600 16800 25-Aug 180 units @ $340 240 61200 78000 29-Aug 110 units @ $590 13 37400 40600 Weighted average Method Income statement weighted average method units price value 80 280 22400 120 300 36000 180 340 61200 380 119600 Weighted average price 314.7368 value at the ending inventory 40915.79 Unit sold 136300 cost of goods sold 78684.21 profit 57615.79
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