Problem 6-2A Calculate ending inventory, cost of goods sold, sales revenue, and
ID: 2460623 • Letter: P
Question
Problem 6-2A Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four inventory methods [(LO3, 4, 5) The following information applies to the questions displayed below.] Greg's Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March 2015. Greg's Bicycle Shop uses a periodic inventory system Cost per Unit Total Cost Date March 1 Beginning inventory March 5 Sale ($360 each) March 9 Purchase March 17 Sale ($410 each) March 22 Purchase March 27 Sale ($435 each) March 30 Purchase TransactionS Units 20 $230 4,600 2,500 2,600 2,240 $11,940 15 10 8 10 12 8 250 260 280Explanation / Answer
2)
Calculation of Ending Inventory March 31, 2015 ( Periodic Inventory System LIFO Method)
Date
Transaction
Units
Unit Cost
Value
1-Mar
Beginning Inventory
20
$230
$4,600
9-Mar
Purchases
10
$250
$2,500
22-Mar
Purchase
10
$260
$2,600
30-Mar
Purchase
8
$80
$640
Cost of Goods Available for Sale
48
$10,340
Less: Total Units Sold during the month
35
Ending Inventory
13
Under Periodic Inventory System FIFO Method, entry to record the sales are made on periodic basis (normally at the end of month). At the end of period ending inventory quantity is found and the FIFO is used to value the ending inventory.
Ending Inventory (total 13 Units) = (8 Units x $80) + ($5 Units x $260) = $1,940
Cost of Goods Sold = Total Value – Ending Inventory = $10,340 - $1,940 = $8,400
3)
Calculation of Ending Inventory March 31, 2015 (Periodic Inventory System LIFO Method)
Date
Transaction
Units
Unit Cost
Value
1-Mar
Beginning Inventory
20
$230
$4,600
9-Mar
Purchases
10
$250
$2,500
22-Mar
Purchase
10
$260
$2,600
30-Mar
Purchase
8
$80
$640
Cost of Goods Available for Sale
48
$10,340
Less: Total Units Sold during the month
35
Ending Inventory
13
Under Periodic Inventory System LIFO method, the entry to record the sales are made on periodic basis (normally at the end of month). At the end of period ending inventory quantity is found and the LIFO is used to value the ending inventory.
Ending Inventory (total 13 Units) = 13 Units x $230 = $2,990
Cost of Goods Sold (LIFO) = Cost of Goods Available for Sale – Ending Inventory = $10,340 - $2,990 = $7,350
Calculation of Ending Inventory March 31, 2015 ( Periodic Inventory System LIFO Method)
Date
Transaction
Units
Unit Cost
Value
1-Mar
Beginning Inventory
20
$230
$4,600
9-Mar
Purchases
10
$250
$2,500
22-Mar
Purchase
10
$260
$2,600
30-Mar
Purchase
8
$80
$640
Cost of Goods Available for Sale
48
$10,340
Less: Total Units Sold during the month
35
Ending Inventory
13
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