The beginning inventory at Funky Party Supplies and data on purchases and sales

Question

The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period ending March 31, 2016, are as follows: Instructions Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 4, using the first in, first-out method. Determine the total sales and the total cost of merchandise sold for the period. Journalize the entries in the sales and cost of merchandise sold accounts. Assume that all sales were on account. Determine the gross profit from sales for the period. Determine the ending inventory cost as of March 31, 2016. Based upon the preceding data, would you expect the inventory using the last-in, first-out method to be higher or lower? The beginning inventory at Funky Party Supplies and data on purchases and sales for a three-month period are shown in Problem 6-1A. Instructions Record the inventory, purchases, and exist of merchandise- sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the last-in, first-out method. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period. Determine the ending inseniory cost as of March 31, 2016.

Explanation / Answer

Solution:

Perpetual Inventory record as per FIFO method:

2500*60=150000

7500*68=510000

2500*60=150000

1250*68=85000

4500*68=306000

18000*70=1260000

4500*68=306000

4500*70=315000

5000*70=350000

15000*71.60=1074000

5000*70=350000

5000*71.60=358000

10000*71.60=716000

2500*72=180000

1250*71.60=89500

2500*72=180000

Cost of Mechandise sold = $2904500

Cost of Ending Inventory = $269500

Now, Gross Profit = Sales - COGS

=5191250-2904500=$2286750

2.LIFO METHOD:

2500*60=150000

7500*68=510000

2500*60=150000

3750*68=255000

2500*60=150000

2500*68=170000

2500*60=150000

2000*68=136000

2500*60=150000

2000*68=136000

18000*70=1260000

2500*60=150000

2000*68=136000

9000*70=630000

2500*60=150000

2000*68=136000

500*70=35000

2500*60=150000

2000*68=136000

500*70=35000

15000*71.60=1074000

2500*60=150000

2000*68=136000

500*70=35000

5000*71.60=358000

2500*60=150000

2000*68=136000

500*70=35000

5000*71.60=358000

2500*72=180000

5000*71.60=358000

500*70=35000

750*68=51000

2500*60=150000

1250*68=85000

COGS =2939000

Cost of closing Inventory = 235000

Gross Profit = Sales- COGS=5191250-2939000=2252250

Date Purchase Sales Balance Jan.1 2500*60=150000 Jan.10 7500*68=510000

2500*60=150000

7500*68=510000

Jan.28

2500*60=150000

1250*68=85000

6250*68=425000 Jan.30 1250*68=85000 5000*68=340000 Feb.5 500*68=34000 4500*68=306000 Feb.10 18000*70=1260000

4500*68=306000

18000*70=1260000

Feb.16

4500*68=306000

4500*70=315000

13500*70=945000 Feb.28 8500*70=595000 5000*70=350000 Mar.5 15000*71.60=1074000

5000*70=350000

15000*71.60=1074000

Mar.14

5000*70=350000

5000*71.60=358000

10000*71.60=716000 Mar.25 2500*72=180000

10000*71.60=716000

2500*72=180000

Mar.30 8750*71.60=626500

1250*71.60=89500

2500*72=180000

Total 3024000 2904500 269500

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