Jill Hansen owns Interior Designs, a furniture store. One of her most popular it
ID: 2422296 • 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
Date purchases Units sales units on hand Total Purchase Amount Total sales Aug-01 Balance fwd.@280 80 80 22400 Aug-04 120 units @ $300 120 200 36000 Aug-20 140 units @ $510 60 71400 Aug-25 180 units @ $340 180 240 61200 Aug-29 110 units @ $590 13 64900 380 119600 314.7368421 136300 sales unit 250 Average Cost Inventory Units 130 1 FIFO: under FIFO units first come is sold first and inventory consist of latest units only Inventory 130 @ 340 (130*340= 44200), cost of goods sold (119600-44200 = 75400), profit(136300-75400 = 60900) 2 LIFO: under LIFO units last come is sold first and inventory consist of first units only Inventory 80 @ 280 & 50 @300[(80*280)+(50*300)= 37400), cost of goods sold (119600-37400 = 82200), profit(136300-82200 = 54100) 3 Weighted Average: under weighted average inventory and cost of goods sold is determined at average cost of inventory Inventory(130*314.74 = 40916), Cost of goods sold(119600-40916 = 78684), Profit(136300-78684 = 57616)
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