Scottsdale Tool and Die Company uses perpetual inventory system for its most pop

Question

Scottsdale Tool and Die Company uses perpetual inventory system for its most popular set of drill bits. It’s beginning inventory, purchases, and sales for the most recent calendar year are as follows.
1. Calculate the Cost of Goods Available for sale both units and dollars.
2. Apply the FIFO, LIFO, Weighted average methods of inventory costing to calculate ending inventory and cost of goods sold.
3. Compute gross profit and the dollar amount of inventory reported on the balance sheet for each of the costing methods. Round all unit costs to two decimals and round all dollar amounts to the nearest whole dollar.
4. The accountant was instructed to use FIFO, but instead computed cost of goods sold using LIFO. Determine the impact on the current years’s income from the error. Please show all calculations!!! Scottsdale Tool and Die Company uses a perpetual inventory system for its most popular set of drill bits. Its beginning inventory, purchases and sales for the most recent calendar year are as follows. Units Sod at Retail Unit Units Acquired at Cost 400 Units @$14 $5,600 200 Units@$15-$3,000 300 Units$16 $4,800 Date Activity 400 Units 200 Units$30 200 Units 400 Units 200 Units $30 200 Units 500 Units 750 Units 1/1 Beg Inv 1/15 Sale 3/10 Purchase 4/1 Sale 5/9 Purchase 9/22 Purchase 11/ 1 Sale 11/28 Purchase Goods Available For Sale Units Sold Units in Ending Inventory 250 Units @$20 5,00 100 Units@$21 $2.100 300 Units $35 450 Units 550 Units Units 700 Units 550 Units Required: Calculate the Cost of Goods Available for Sale both in units and dollars 1. 2. Apply the FIFO, LIFO, Weighted Average methods of inventory costing to calculate ending inventory and cost of goods sold Compute gross profit and the dollar amount of inventory reported on the balance sheet for each of the costing methods. Round all unit costs to 2 decimals and round all dollar amounts to the 3. nearest whole dollar 4. The accountant was instructed to use FIFO, but instead computed Cost of Goods Sold using LIFO. Determine the impact on the current year's income from the error

Explanation / Answer

Req 1: COST OF GOODS AVAILABLE FOR SALE: Beginning Inventory (400 units @14) 5600 Purchase-10 Mar (200 units @15) 3000 Purchasae May9 (300 units @16) 4800 Purchase Sep 22 (250 units @20) 5000 Purchasse Nov 28 (100 units @21) 2100 Total Cost of Goods available 20500 STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 400 14 5600 15-Jan 200 14 2800 200 14 2800 10-Mar 200 15 3000 200 14 2800 200 15 3000 1-Apr 200 14 2800 200 15 3000 9-May 300 16 4800 200 15 3000 300 16 4800 22-Sep 250 20 5000 200 15 3000 300 16 4800 250 20 5000 1-Nov 200 15 3000 200 16 3200 100 16 1600 250 20 5000 28-Nov 100 21 2100 200 16 3200 250 20 5000 100 21 2100 TOTAL 850 14900 700 10200 550 10300 STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 400 14 5600 15-Jan 200 14 2800 200 14 2800 10-Mar 200 15 3000 200 14 2800 200 15 3000 1-Apr 200 15 3000 200 14 2800 9-May 300 16 4800 200 14 2800 300 16 4800 22-Sep 250 20 5000 200 14 2800 300 16 4800 250 20 5000 1-Nov 250 20 5000 200 14 2800 50 16 800 250 16 4000 28-Nov 100 21 2100 200 14 2800 250 16 4000 100 21 2100 TOTAL 850 14900 700 11600 550 8900 STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 400 14 5600 15-Jan 200 14 2800 200 14 2800 10-Mar 200 15 3000 200 14 2800 200 15 3000 Average 400 14.5 5800 1-Apr 200 14.5 2900 200 14.5 2900 9-May 300 16 4800 200 14.5 2900 300 16 4800 22-Sep 250 20 5000 200 14.5 2900 300 16 4800 250 20 5000 Average 750 16.93 12700 1-Nov 300 16.93 5080 450 16.93 7620 28-Nov 100 21 2100 450 16.93 7620 100 21 2100 TOTAL 850 14900 700 10780 550 17.67 9720 Income Statement: FIFO LIFO Average Ssales (400 units @30+300 units @35) 22500 22500 22500 Less: Cost of Goods sold 10200 11600 10780 Gross Profit 12300 10900 11720 Balance Sheet: Ending Inventory 10300 8900 9720 Req 4: Current year income will be undertstated by $ 1400 (12300-10900)

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