Data below represents the purchases in August of Item ABC for Golson Company. As
ID: 2421811 • Letter: D
Question
Data below represents the purchases in August of Item ABC for Golson Company. Assume the company sold 1 unit during the month at a selling price of $50.
Date
Item ABC
Units
Cost
Total cost
1-Aug
Purchase
10
$35
$350
7-Aug
Purchase
8
$36
$288
21-Aug
Purchase
7
$37
$259
Total
25
$897
Average cost per unit
$36
Instructions:
Using FIFO, LIFO, and the weighted average method, determine the gross profit, cost of goods sold, and cost of ending inventory. Use the form provided for your answers.
Gross Profit
Cost of Merchandise Sold
Ending Inventory
a) First in, first out
b) Last in, first out
c) Average
Date
Item ABC
Units
Cost
Total cost
1-Aug
Purchase
10
$35
$350
7-Aug
Purchase
8
$36
$288
21-Aug
Purchase
7
$37
$259
Total
25
$897
Average cost per unit
$36
Explanation / Answer
Gross profit Cost of merchandise sold Ending inventory a) FIFO $50 - 35 = $15 $35 897 - 35 = 862 b) LIFO $50 - 37 = $13 $37 897 - 37 = 860 c) weighted average $50 - 36 = $14 36 897 - 36 = 861
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