Homework: Week 4 - Chapter 06 problems Score: 0 of 1 pt P6-29A (similar to) Save

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Homework: Week 4 - Chapter 06 problems Score: 0 of 1 pt P6-29A (similar to) Save 2 of 6 (0 complete) HW Score: 0%, 0 of 6 pts Question Help * Omamental Iron Works began August with 55 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions (Click the icon to view the transactions.) Read the requirements Requirement 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method. Start by entering the beginning inventory balances. 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 quanty 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 Cost Quantity Cost Cost Unit Total Unit Total Cost Quantity Cost Date Quantity Cost Aug. 1 21 30 Totals

Explanation / Answer

FIFO Purchases UNITS SOLD Closing Stock QTY RATE Amt QTY RATE Amt QTY RATE Amt august 55 $35.00 1925 55 35 1925 3rd aug 45 35 1575 10 35 350 08-Aug 75 $52.00 3900 10 35 350 75 52 3900 21-Aug 10 35 350 15 52 780 60 52 3120 30-Aug 10 $55.00 550 15 52 780 10 55 550 140 6375 115 5045 COST OF MERCHANDISE SOLD = 5045 CLOSING STOCK = $ 1330 [780+550] LIFO Purchases UNITS SOLD Closing Stock QTY RATE Amt QTY RATE Amt QTY RATE Amt 01-Aug 55 $35.00 1925 55 35 1925 03-Aug 45 35 1575 10 35 350 08-Aug 75 $52.00 3900 10 35 350 75 52 3900 21-Aug 70 52 3640 10 35 350 5 52 260 30. aug 10 $55.00 550 10 35 350 5 52 260 10 55 550 140 6375 115 5215 COST OF MERCHANDISE SOLD = 5215 CLOSING STOCK = $ 1160 [350+260+550] WEIGHTED AVG QTY RATE Amt 01-Aug Opening 55 $     35.00 $ 1,925.00 8 aug Purchase 75 $     52.00 $ 3,900.00 30-Aug Purchase 10 $     55.00 $     550.00 TOTAL 140 $ 6,375.00 Cost /Unit = 6375/140 units $        45.54 per unit Cost of units sold= total no of units sold*weigted avg cost per unit = 115 units*45.54 5236.6071 $ FIFO LIFO Weighted AVG Sales Revenue $ 9,685.00 $ 9,685.00 $ 9,685.00 [45*83+70*85] COGS $ 5,045.00 $ 5,215.00 $ 5,236.61 GROSS MARGIN $ 4,640.00 $ 4,470.00 $ 4,448.39 6 If the Company wants to maximise its profit, company should opt for FIFO with higher gross margin

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