Questions 17-23 (of 23) The following information applies to the questions displ
ID: 2405742 • Letter: Q
Question
Questions 17-23 (of 23) The following information applies to the questions displayed below Greg's Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike for the month of March. Greg's Bicycle Shop uses a perlodic inventory system Cost per Unit Date March1 March 5 Units Total Cost 20 $20s 4100 10 225 2250 2,350 2,295 Beginning inventory Sale ($310 each) March 9 Purchase March 17 Sale ($360 each March 22 Purchase March 27 Sale ($385 each) March 30 Purchase 10 235 12 9 255 10.995 17. 100 points Required: 1. Calouiate ending inventory and cost of goods sold at March March 9 purchase, and the March 27 sale consists of 31, using the specific identification method. The March 5 sale consists of bikes from beginning inventory. the March 17 sale consist four bikes from beginning inventory and eight bikes from the March 22 purchase. 888 FaExplanation / Answer
1) Under specific identification method, cost of goods sold and ending inventory is calculated as follows:-
Cost of goods sold = (15 units*$205)+(8 units*$225)+[(4 units*$205)+(8 units*$235)]
= $3,075+1,800+($820+$1,880) = $7,575
Ending Inventory = 1 unit from beg. inv.+2 units from Mar 9+2 units from Mar 22+9 units from Mar 30
= (1 units*$205)+(2 units*$225)+(2 units*$235)+(9 units*$255)
= $205+$450+$470+$2,295 = $3,420
2) Under FIFO method, goods purchased first are sold first. Cost of goods sold and ending inventory under this method is calculated as follows:-
Total Units sold = 15 units+8 units+12 units = 35 units
Total units available for sale = 20 units+10 units+10 units+9 units = 49 units
Ending Inventory in units = 49 units - 35 units = 14 units
Cost of goods sold = 20 units from Beg. Inv.+10 units from Mar 9+5 units from Mar 22
= (20 units*$205)+(10 units*$225)+(5 units*$235)
= $4,100+$2,250+$1,175 = $7,525
Ending Inventory = 5 units from Mar 22+9 units from Mar 30
= (5 units*$235)+(9 units*$255)
= $1,175+$2,295 = $3,470
3) Under LIFO method, goods purchased last are sold first. Cost of goods sold and ending inventory under this method is calculated as follows:-
Cost of goods sold = (9 units*$255)+(10 units*$235)+(10 units*$225)+(6 units*$205)
= $2,295+$2,350+$2,250+$1,230 = $8,125
Ending Inventory = 14 units*$205 = $2,870
4) Weighted Average cost per unit = Total cost of goods available for sale/Total units available for sale
= $10,995/49 units = 224.38776 per unit
Cost of goods sold = 35 units*$224.38776 = $7,853.57
Ending Inventory = 14 units*$224.38776 = $3,141.43
5) Sales Revenue = (15 units*$310)+(8 units*$360)+(12 units*$385)
= $4,650+$2,880+$4,620 = $12,150
Calculation of gross profit under each method (Amounts in $)
Particulars Specific Identification FIFO LIFO Weighted-average cost Sales revenue 12,150 12,150 12,150 12,150 Less: Cost of goods sold (7,575) (7,525) (8,125) (7,853.57) Gross Profit 4,575 4,625 4,025 4,296.43Related Questions
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