Montoure Company uses a perpetual inventory system. It entered into the followin
ID: 2343221 • Letter: M
Question
Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. Required: 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. For specific identification, units sold consist of 700 units from beginning inventory, 200 from the February 10 purchase, 100 from the March 13 purchase, 60 from the August 21 purchase, and 400 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.) 4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)
Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. Units Acquired at Cost Date Activities Units Sold at Retail 700 unitse $50 per 300 units $46 per 100 unitse $40 per 1 Beginning inventory unit Feb. 10 Purchase Mar. 13 Purchase Mar. 15 Sales Aug. 21 Purchase Sept. 5 Purchase Sept.10 Sales e $70 per 780 units unit 110 unitse $55 570 units $52 unit unit 680 units $70 per 1,460 units un Totals 1,780 units Required: 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. For specific identification, units sold consist of 700 units from beginning inventory, 200 from the February 10 purchase, 100 from the March 13 purchase, 60 from the August 21 purchase, and 400 from the September 95 purchase. (Round your average cost per unit to 2 decimal places.) 4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.) Complete this question by entering your answers in the tabs below Required Required Required Required Compute cost of goods available for sale and the number of units available for sale 4 Cost of goods available for sale Number of units available for sale units Required 1 Required 2 >Explanation / Answer
Ans. 1 Calculation cost of goods available for sale
Jan 1 Begning inventory (700X50) = 35000
Feb 10 Purchase (300X46) = 13800
Mar 13 Purchase (100X40) = 4000
Aug 21 Purchase (110X55) = 6050
Sept 5 Purchase (570X52) = 29640
Total Goods available for sale = 88490
Total no of units available for sale = 1780
Ending inventory (1780-1460) = 320units
Calculation of Ending inventory using the FIFO,LIFO,Weighted average and Specific indentification.
1. Ending inventory under FIFO
Date Value
Jan 1 Begning inventory(700X50) = 35000
Feb 10 Purchase (300X46) = 13800
Mar 13 Purchase (100X40) = 4000
Mar 15 Selling (700X50+80X46) = (38680)
Aug 21 Purchase (110X55) = 6050
Sept 5 Purchase (570X52) = 29640
Sept 10 Selling (220X46+110X40+
(110X55+250X52) = 33170
Ending inventory (320X52) = 16640
LiFO method
1. Ending inventory under LIFO
Date Value
Jan 1 Begning inventory(700X50) = 35000
Feb 10 Purchase (300X46) = 13800
Mar 13 Purchase (100X40) = 4000
Mar 15 Selling (100X40+300X46+
380X50) = (36800)
Aug 21 Purchase (110X55) = 6050
Sept 5 Purchase (570X52) = 29640
Sept 10 Selling (570X52+110X55) = (35690)
Ending inventory (320X52) = 16000
Ending inventory under Weighted Average method
1. Ending inventory under Weighted Average
Date Value
Jan 1 Begning inventory(700X50) = 35000
Feb 10 Purchase (300X46) = 13800
Mar 13 Purchase (100X40) = 4000
Value till Mar 13 (1100X48*) = 52800 *(52800/1100)
Mar 15 Selling (780X48) = (37440)
Aug 21 Purchase (110X55) = 6050
Sept 5 Purchase (570X52) = 29640
Value till Sept 5 (1000X*51.05) = 51050 *(51050/1000)
Sept 10 Selling (680X51.05) = (34714)
Ending inventory (320X51.05) = 16336
(d) Calculation of Ending inventory using specific indentification method
Total value of goods available for sale 1780 units = 88490
Selling (700X50+200X46+100X40+60X55+400X52)
(35000+9200+4000+3300+20800) = (72300)
Ending inventory value = 16190
Ending inventory using different valuation method
FIFO 16640
LIFO 16000
Weighted Average 16336
Specific indentifiation 16190
Ans 4 Calculation of Gross profit
FIFO LIFO Weighted Avg Specific inden.
Sale value 102200 102200 102200 102200
(780X70+680X70)
COGS 71850 72490 72154 72300
(88490-16640) (88490-16000) (88490-16336) (88490-16190)
Gross profit 30350 29710 30046 29900
(Sale-COGS)
Note: Cost of goods sold will come after deducting value of ending inventory from the total value of goods available for sale.
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