Sally Smith owns a furniture store. One of her most popular items is a leather r
ID: 2417723 • Letter: S
Question
Sally Smith owns a furniture store. One of her most popular items is a leather recliner.
Following is the recliner inventory activity for August. The recliners on hand at August 1 had a unit cost of $300.
Date
Purchases
Sales
Units on Hand
8/1
Balance fwd
60
8/6
100 units @ $315
`
160
8/15
120 units @ $500
40
8/22
150 units @ $325
190
8/30
100 units @ $530
90
Required:
1)If the furniture store uses the first-in, first-out (FIFO) inventory method and periodic approach, what values would be assigned to ending inventory, cost of goods sold and gross profit?
2)If the furniture store uses the last-in, first-out (LIFO) inventory method and periodic approach, what values would be assigned to ending inventory, cost of goods sold and gross profit?
3)If the furniture store uses the weighted-average inventory method and periodic approach, what values would be assigned to ending inventory, cost of goods sold and gross profit?
NOTE: Be sure to show all your calculations. This has the possibility of partial credit. Incorrect answers without calculations will automatically result in zero points.
Sally Smith owns a furniture store. One of her most popular items is a leather recliner.
Date
Purchases
Sales
Units on Hand
8/1
Balance fwd
60
8/6
100 units @ $315
`
160
8/15
120 units @ $500
40
8/22
150 units @ $325
190
8/30
100 units @ $530
90
Explanation / Answer
Solution.
1.
2.
3.
Weihted average rate = 98,250 / 310 = $316.93.
FIFO Method Date Particulars Unit Rate Amount 1-Aug Balance fwd 60 300.00 18,000.00 6-Aug Purchase 100 315.00 31,500.00 22-Aug Purchase 60 325.00 19,500.00 Cost of goods sold 69,000.00 15-Aug Sales 120 500.00 60,000.00 30-Aug Sales 100 530.00 53,000.00 Gross profit 44,000.00 Valuation of endining Inventory Date Particulars Unit Rate Amount 22-Aug purchase 90 325 29,250Related Questions
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