Problem 6-2A Calculate ending inventory, cost of goods sold, sales revenue, and

Question

Problem 6-2A Calculate ending inventory, cost of goods sold, sales revenue, and gross profit for four inventory methods (LO6-3, 6-8) The following information applies to the questions displayed below Greg's Bicycle Shop has the following transactions related to its top-selling Mongoose mountaln blke for the month of March. Greg's Bicycle Shop uses a perlodic inventory syste Date March 1 March 5 March 9 March 17 March 22 March 27 March 30 Units 20 15 10 8 10 12 9 Cost per $250 270 280 300 Unit Total Cost Beginning inventory Sale ($400 each) Purchase Sale ($450 each) Purchase Sale ($475 each) Purchase S 5,000 2,700 2,800 2,700 S 13,200

Explanation / Answer

FIFO

No of units available for sale = 49

Unit sold = 35

Ending inventory = 14

Gross profit = sales - COGS = 15300 - 9100 = $6200

LIFO

Gross profit under LIFO = sales - COGS = 15300 - 9700 = $5600

Weighted Average cost

Begining Inventory = 20 5000

Purchase = 29 8200

Total Inventory = 49 13200

Average Inventory cost = 13200 / 49 = 269.39 per unit

COGS = 35 x 269.39 = 9429

Ending Inventory = 14 x 269.39 = 3771

Gross profit under this method = Sales - COGS = 15300 - 9429 = 5871

Journal entry to record the LIFO adjustment

* calculation for specific identification method can not be done because the specific information for the calculaion that which inventory sold from sales is not provided so cannot be calculated. all other answers are provided.

Cost of goods sold units unit cost total From beg inventory 20 250 5000 From Mar 9 Purchase 10 270 2700 From Mar 22 Purchase 5 280 1400 Total COGS 9100

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