Question

Requirement 1. Requiremen Compute cost of goods sold and gross profit using the FIFO inventory costing method. Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Purchases Cost of Goods Sold Inventory on Hand Unit Total Unit Total Unit Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost May 1 11 23 26 29 Totals

Requirement 1. Compute cost of goods sold and gross profit using the FIFO inventory costing method.

Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.)

	Purchases			Cost of Goods Sold			Inventory on Hand
		Unit	Total		Unit	Total		Unit	Total
Date	Quantity	Cost	Cost	Quantity	Cost	Cost	Quantity	Cost	Cost
May 1
11
23
26
29
Totals

Compute cost of goods sold and gross profit using the FIFO inventory costing method.

2.

Compute cost of goods sold and gross profit using the LIFO inventory costing method.

3.

Compute cost of goods sold and gross profit using the weighted-average inventory costing method. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)

4.

Which method results in the largest gross profit, and why?

May 1,Beginning merchandise inventory,20,tires @,$66,each

11,Purchase,8,tires @,$73,each

23,Sale,15,tires @,$84,each

26,Purchase,13,tires @,$84,each

29,Sale,15,tires @,$84,each

Answer 1

CALCULATE COST OF GOODS SOLD :
	FIFO	LIFO	WEIGHTED AVERAGE
Beginning inventory	$1,320	$1,320	$1,320
Add: Purchase	$1,676	$1,676	$1,676
Cost of goods available for sale	$2,996	$2,996	$2,996
Less: Ending inventory	$924	$726	$804
	(11*$84)	(11*$66)	($2996/41*11)
Cost of goods sold	$2,072	$2,270	$2,192

CALCULATE GROSS PROFIT :
	FIFO	LIFO	WEIGHTED AVERAGE
Sales revenue	2520	2520	2520
Cost of goods sold	$2,072	$2,270	$2,192
Gross profit	$448	$250	$328