Date Description Quantity Unit Cost or Selling Price a- calculate cost per unit.
ID: 2490246 • Letter: D
Question
Date
Description
Quantity
Unit Cost or
Selling Price
a- calculate cost per unit. (Round answer to 2 decimal places, e.g. 5.25.)
B- Calculate ending inventory, cost of goods sold, gross profit under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round average-cost method answers to 2 decimal places, e.g. 1,250.25 and other answers to 0 decimal places, e.g. 1,250.)
C- Calculate gross profit rate under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round answers to 1 decimal place, e.g. 51.2%.)
You are provided with the following information for Koetteritz Inc. for the month ended June 30, 2017. Koetteritz uses the periodic method for inventory.Date
Description
Quantity
Unit Cost or
Selling Price
a- calculate cost per unit. (Round answer to 2 decimal places, e.g. 5.25.)
B- Calculate ending inventory, cost of goods sold, gross profit under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round average-cost method answers to 2 decimal places, e.g. 1,250.25 and other answers to 0 decimal places, e.g. 1,250.)
C- Calculate gross profit rate under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round answers to 1 decimal place, e.g. 51.2%.)
Explanation / Answer
Answer: A)
Calculating units available for sale and their total cost:
Explanation:
Net purchases = purchases - purchase returns
Net purchases for June 18: 52 units - 11 units = 41 units
Calculating Average cost per unit:
Average cost per unit = Total cost of units available for sale/ Total no. of units available for sale
Average cost per unit = $10632/243 units = $43.75 per unit
Answer: B)
First we need to calculate number of units sold.
Calculation of units sold and total sales revenue:
Explanation:
Net sales = Sales - sale returns
Net sales on June 11:107 units - 15 units = 92 units
Calculating Ending inventory units:
Ending inventory units = Units available for sale - Units sold
Ending inventory units = 243 units (calculated in part A) - 160 units = 83 units
1) LIFO Method
Cost of ending inventory:
Cost of goods sold:
Cost of goods sold = Cost of units vaialble for sale - Cost of ending inventory
Cost of goods sold = $10632 (calculated in part A) - $3413 = $7219
Gross profit:
Gross profit = Sales revenue - Cost of goods sold
Gross profit = $11060 (calculated in part B at the starting) - $7219 = $3841
2) FIFO Method
Cost of ending inventory:
Cost of goods sold:
Cost of goods sold = Cost of units vaialble for sale - Cost of ending inventory
Cost of goods sold = $10632 (calculated in part A) - $3908 = $6724
Gross profit:
Gross profit = Sales revenue - Cost of goods sold
Gross profit = $11060 (calculated in part B at the starting) - $6724 = $4336
3) Average-cost Method
Cost of ending inventory:
Cost of ending inventory = Ending inventory units * Average cost per unit
Cost of ending inventory = 83 units * $43.75 per unit = $3631.25
Cost of goods sold:
Cost of goods sold = Units sold * Average cost per unit
Cost of goods sold = 160 units *$43.75 per unit = $7000
Gross profit:
Gross profit = Sales revenue - Cost of goods sold
Gross profit = $11060 (calculated in part B at the starting) - $7000 = $4060
Answer: C)
Gross profit rate = Gross profit/ Sales revenue
1) LIFO
Gross profit rate = $3841/$11060 = 34.7%
2) FIFO
Gross profit rate = $4336/$11060 = 39.2%
3) Average- cost Method
Gross profit rate = $4060/$11060 = 36.7%
Note: Calculation related to gross profit and sales revenue are done in part B.
Units available for sale and total cost Date Description Units Price per unit Total amount = units * price per unit Jun-01 Beginning inventory 39 $ 39.00 $ 1,521.00 Jun-04 purchases 136 $ 43.00 $ 5,848.00 Jun-18 Net purchases 41 $ 46.00 $ 1,886.00 Jun-28 Purchases 27 $ 51.00 $ 1,377.00 Total 243 $ 10,632.00Related Questions
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