The beginning inventory for Dunne Co. and data on purchases and sales for a thre

Question

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown below

Date

FIFO

1. Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system.

LIFO

2. Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system.

Weighted Average Cost Method

3. Determine the inventory on June 30, 2016, and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the dollar.

Final Question

4. Compare the gross profit and June 30, 2016, inventories using the following column headings:

1

FIFO

LIFO

Weighted Average

2

Sales

3

Cost of merchandise sold

4

Gross profit

5

6

Inventory, June 30, 2016

Date

Transaction Number of Units Per Unit Total Apr. 3 Inventory 25 $1,200 $30,000 8 Purchase 75 1,240 93,000 11 Sale 40 2,000 80,000 30 Sale 30 2,000 60,000 May 8 Purchase 60 1,260 75,600 10 Sale 50 2,000 100,000 19 Sale 20 2,000 40,000 28 Purchase 80 1,260 100,800 June 5 Sale 40 2,250 90,000 16 Sale 25 2,250 56,250 21 Purchase 35 1,264 44,240 28 Sale 44 2,250 99,000

Explanation / Answer

ANSWER 1, 2, 3, 4 CUMMULATIVELY SOLVED

DECESSION ;- FIFO IS BEST METHOD AS IT GENERATES HIGHEST PROFIT

NOTES

NO OF UNITS SOLD =249 AND PURCHASED +OPENING =275

SO CLOSING INVENTORY IN UNITS = 26 UNITS

IN FIFO INVENTORY => 26 * 1264 OJ JUNE => $32864

IN LIFO => 25 *1200 + 1 * 1240 => $31240

IN WEIGHTED AVERAGE => 343640/275 => 1249.6 *26 => 32489.6 OR $32490

1 PARTICULARS FIFO($) LIFO($) WEIGHTED AVERAGE($) 2 SALES 525250 525250 525250 3 COGS 310776 312400 311150 4 GROSS PROFIT 214474 212850 214100 5 6 INVENTORY, JUNE 30,2016 32864 31240 32490

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