Exercise 8-13 Inventory information for Part 311 of Monique Aaron Corp. disclose

Question

Exercise 8-13

Inventory information for Part 311 of Monique Aaron Corp. discloses the following information for the month of June.

June 1 Balance 303 units @ $12 June 10 Sold 196 units @ $29

       11 Purchased 797 units @ $15 15 Sold 498 units @ $30

       20 Purchased 502 units @ $16 27 Sold 303 units @ $33

Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

                                   (1) LIFO (2) FIFO

Cost of Goods Sold       $            $

Ending Inventory           $            $

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?

The ending inventory at LIFO $

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Gross Profit (FIFO) $

Explanation / Answer

Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO.

Cost of Goods Available for sale:

Cost of Goods Available for sale = $ 23,623

Unit available for sale = 1602

Unit Sold = (196 + 498+303) = 997

Ending Inventory = 1602 - 997 = 605

(1) LIFO

Ending Inventory =303*12 + (605-303)*15

Ending Inventory = $ 8166

Cost of Goods Sold = Cost of Goods Available for sale-Ending Inventory

Cost of Goods Sold = 23623 - 8166

Cost of Goods Sold = $ 15457

(2) FIFO

Ending Inventory =502*16 + (605-502)*15

Ending Inventory = $ 9577

Cost of Goods Sold = Cost of Goods Available for sale-Ending Inventory

Cost of Goods Sold = 23623 - 9577

Cost of Goods Sold = $ 14046

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?

The ending inventory at LIFO = (303-196)*12 + (797-498)*15 + (502-303)*16

The ending inventory at LIFO = $ 8953

Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Sales :

In FIFO, Cost of Good Sold is equal in both perpetual inventory method & periodic inventory method

Cost of Good Sold = 14046

Gross Profit (FIFO) = Sale - Cost of Good Sold

Gross Profit (FIFO) = 30623-14046

Gross Profit (FIFO) = $ 16,577

Unit Rate Amount June 1 303 12 3636 June 11 797 15 11955 June 20 502 16 8032 Total 1602 23623

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