Warnerwoods Company uses a perpetual inventory system. It entered into the follo
ID: 2581581 • Letter: W
Question
Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. (For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.)
1.Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and
(d) specific identification. (Round all amounts to cents.) 4. Compute gross profit earned by the company for each of the four costing methods in part
Check (3) Ending inventory: FIFO, $14,800; LIFO, $13,680, WA, $14,352
(4) LIFO gross profit, $17,980
from the March 18 purchase and 120 units from the March 25 purchase.) Date Activities Units Acquired at Cost Units Sold at Retail Mar. I Beginning inventory....100 units @ $50.00 per unit 420 units @ $85.00 per unit Mar 29 Sales Totals 160 units @ $95.00 per unit 580 units . 820 unitsExplanation / Answer
FIFO METHOD
DATE
PURCHASE
SALES
CLOSING INVENTORY
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
MAR 1
100
50
5000
MAR 5
400
55
22000
500
(400*55)+(50*100)
27000
MAR 9
420
85
35700
80
55
4400
MAR 18
120
60
7200
200
(80*55)+(120*60)
11600
MAR25
200
62
12400
400
(80*55)+(120*60)+(200*62)
24000
MAR 29
160
95
15200
240
(40*60)+(200*62)
14800
CL-INVENTORY
14800
ADD -SALE
50900
65700
LESS PURCHASE
41600
LESS OP -INVENTORY
5000
GROSS PROFIT
19100
LIFO METHOD
DATE
PURCHASE
SALES
CLOSING INVENTORY
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
MAR 1
100
50
5000
MAR 5
400
55
22000
500
(400*55)+(50*100)
27000
MAR 9
420
85
35700
80
50
4000
MAR 18
120
60
7200
200
(80*50)+(120*60)
11200
MAR25
200
62
12400
400
(80*50)+(120*60)+(200*62)
23600
MAR 29
160
95
15200
240
(80*50)+(120*60)+(40*62)
13680
CL-INVENTORY
13680
ADD -SALE
50900
64580
LESS PURCHASE
41600
LESS OP -INVENTORY
5000
GROSS PROFIT
17980
AVERAGE METHOD
DATE
PURCHASE
SALES
CLOSING INVENTORY
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
MAR 1
100
50
5000
MAR 5
400
55
22000
500
54(2700/500)
27000
MAR 9
420
85
35700
80
54
4320
MAR 18
120
60
7200
200
57.6(7200+4320/200)
11200
MAR25
200
62
12400
400
59 (23600/400)
23600
MAR 29
160
95
15200
240
59
14160
CL-INVENTORY
14160
ADD -SALE
50900
65060
LESS PURCHASE
41600
LESS OP -INVENTORY
5000
GROSS PROFIT
18460
SPECIFIC IDENTIFICATION METHOD
DATE
PURCHASE
SALES
CLOSING INVENTORY
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
MAR 1
100
50
5000
MAR 5
400
55
22000
500
27000
MAR 9
420
85
35700
80
(20*50)+(60*55)
4300
MAR 18
120
60
7200
200
11500
MAR25
200
62
12400
400
23900
MAR 29
160
95
15200
240
4300+(80*60)+(80*62)
14060
CL-INVENTORY
14060
ADD -SALE
50900
64960
LESS PURCHASE
41600
LESS OP -INVENTORY
5000
GROSS PROFIT
18360
FIFO METHOD
DATE
PURCHASE
SALES
CLOSING INVENTORY
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
UNIT
PRICE
GROSS
MAR 1
100
50
5000
MAR 5
400
55
22000
500
(400*55)+(50*100)
27000
MAR 9
420
85
35700
80
55
4400
MAR 18
120
60
7200
200
(80*55)+(120*60)
11600
MAR25
200
62
12400
400
(80*55)+(120*60)+(200*62)
24000
MAR 29
160
95
15200
240
(40*60)+(200*62)
14800
CL-INVENTORY
14800
ADD -SALE
50900
65700
LESS PURCHASE
41600
LESS OP -INVENTORY
5000
GROSS PROFIT
19100
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