299 units @ $45 1. Assuming that the perpetual inventory method is used and cost

Question

299 units @ $45

1. Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?

2. Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Inventory information for Part 311 of Sheridan Corp. discloses the following information for the month of June.
June 1 Balance 302 units @ $17 June 10 Sold 200 units @ $40 11 Purchased 795 units @ $20 15 Sold 496 units @ $42 20 Purchased 498 units @ $22 27 Sold

299 units @ $45

1. Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO?

2. Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Explanation / Answer

Solution 1:

Ending inventory = 102x$17 + 299x$20 + 199x$22

= $1,734 + $5,980 + $4,378

= $12,092

Solution 2:

Cost of goods sold = 302x$17 + 693x$20 = $5,134. + $13,860

= $18,994

Sales = 200x$40 + 496x$42 + 299x$45

= $8,000 + $20,832 + $13,455 = $42,287

Gross profit = sales - cost of goods sold

= $42,287 - $18,994

= $23,293

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