ts in a higher gross profit ruianuise Vehtory s Which method resul cost of goods
ID: 2552827 • Letter: T
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ts in a higher gross profit ruianuise Vehtory s Which method resul cost of goods sold and gross profit-FIFO, LIFO, and ighted-average methods A Store completed the followving perpetual inventory transactions B Tire for a line of tires: May 1 Beginning merchandise inventory 16 tires e s 65 each 10 tires@$ 78 each 12 tires$ 88 each 14 tires@$ 80 each 18 tires @$ 88 each 11 Purchase 23 Sale 26 Purchase 29 Sale Requirements 1. Compute cost of goods sold and gross profit using the FIFO inventory costing 2 Compure cost of goods sold and gross profit using the LIFO inventory costing 3. Compute cost of goods sold and gross profit using the weighted-average invento method. method. costing method. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.) amounts to thenhted-average cost per uni Which method results in the largest gross profit, and why? 4.Explanation / Answer
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-May 16 65 1040 11-May 10 78 780 16 65 1040 10 78 780 23-May 12 65 780 4 65 260 10 78 780 26-May 14 80 1120 4 65 260 10 78 780 14 80 1120 29-May 4 65 260 10 78 780 4 80 320 10 80 800 TOTAL 24 1900 30 2140 10 80 800 Cost of Goods sold 2140 Gross profits 500 sales (30units @88) 2640 Less: COGS 2140 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-May 16 65 1040 11-May 10 78 780 16 65 1040 10 78 780 23-May 10 78 780 2 65 130 14 65 910 26-May 14 80 1120 14 65 910 14 80 1120 29-May 14 80 1120 4 65 260 10 65 650 TOTAL 24 1900 30 2290 10 65 650 Cost of Goods sold 2290 Gross profits 350 sales (30units @88) 2640 Less: COGS 2290 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-May 16 65 1040 11-May 10 78 780 16 65 1040 10 78 780 Average 26 70 1820 23-May 12 70 840 14 70 980 26-May 14 80 1120 14 70 980 14 80 1120 Average 28 75 2100 29-May 18 75 1350 10 75 750 TOTAL 24 1900 30 2190 10 75 750 Cost of Goods sold 2190 Gross profits 450 sales (30units @88) 2640 Less: COGS 2190 Req 4: FIFO methd result in highest Gross profit
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