Montoure Company uses a perpetual inventory system. It entered into the followin
ID: 2467470 • Letter: M
Question
Montoure Company uses a perpetual inventory system. It entered into the following calendar-year 2015 purchases and sales transactions. Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 660 units @ $ 60 per unit Feb. 10 Purchase 330 units @ $ 57 per unit Mar. 13 Purchase 110 units @ $ 45 per unit Mar. 15 Sales 715 units @ $ 70 per unit Aug. 21 Purchase 160 units @ $ 65 per unit Sept. 5 Purchase 570 units @ $ 61 per unit Sept. 10 Sales 730 units @ $ 70 per unit Totals 1,830 units 1,445 units
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 660 units from beginning inventory, 230 from the February 10 purchase, 110 from the March 13 purchase, 110 from the August 21 purchase, and 335 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.)
Explanation / Answer
Answer 1. Calculation of Cost of Goods & Number Available for Sale Date Purchases Unit Cost Total Cost Jan-01 Beginning Stock 660 60 39,600 Feb-10 Purchases 330 57 18,810 Mar-13 Purchases 110 45 4,950 Aug-21 Purchases 160 65 10,400 Sep-05 Purchases 570 61 34,770 Goods Available for Sale 1,830 108,530 Answer 2. No. of Units in Ending Inventory Units Available For Sale 1830 Unit Sold 1445 Units in Ending Inventory 385 Answer 3. a. FIFO Date Purchases Cost of Goods Sold Balance Unit Cost Total Unit Cost Total Unit Cost Total Jan-01 660 60 39,600 Feb-10 330 57 18,810 660 60 39,600 330 57 18,810 990 58,410 Mar-13 110 45 4,950 660 60 39,600 330 57 18,810 110 45 4,950 1,100 63,360 Mar-15 660 60 39,600 275 57 15,675 55 57 3,135 110 45 4,950 715 42,735 385 20,625 Aug-21 160 65 10,400 275 57 15,675 110 45 4,950 160 65 10,400 545 31,025 Sep-05 570 61 34,770 275 57 15,675 110 45 4,950 160 65 10,400 570 61 34,770 1,115 65,795 Sep-10 275 57 15,675 385 61 23,485 110 45 4,950 160 65 10,400 185 61 11,285 730 42,310 Total 1,170 68,930 1,445 85,045 Answer 3. b. LIFO Date Purchases Cost of Goods Sold Balance Unit Cost Total Unit Cost Total Unit Cost Total Jan-01 660 60 39,600 Feb-10 330 57 18,810 660 60 39,600 330 57 18,810 990 58,410 Mar-13 110 45 4,950 660 60 39,600 330 57 18,810 110 45 4,950 1,100 63,360 Mar-15 110 45 4,950 385 60 23,100 330 57 18,810 275 60 16,500 715 40,260 Aug-21 160 65 10,400 385 60 23,100 160 65 10,400 545 33,500 Sep-05 570 61 34,770 385 60 23,100 160 65 10,400 570 61 34,770 1,115 68,270 Sep-10 570 61 34,770 385 60 23,100 160 65 10,400 730 45,170 Total 1,170 68,930 1,445 85,430 Answer 3. c. Weighted Average Date Purchases Cost of Goods Sold Balance Unit Cost Total Unit Cost Total Unit Cost Total Jan-01 660 60.00 39,600 Feb-10 330 57 18,810 660 60.00 39,600 330 57.00 18,810 990 59.00 58,410 Mar-13 110 45 4,950 990 59.00 58,410 110 45.00 4,950 1,100 57.60 63,360 Mar-15 715 57.60 41,184 385 57.60 22,176 Aug-21 160 65 10,400 385 57.60 22,176 160 65.00 10,400 545 59.77 32,576 Sep-05 570 61 34,770 545 59.77 32,576 570 61.00 34,770 1,115 60.40 67,346 Sep-10 730 60.40 44,092 385 60.40 23,254 Total 1,170 68,930 1,445 85,276 Answer 3. D. Specific Identification Date Purchases Cost of Goods Sold Balance Unit Cost Total Cost Unit Cost Total Unit Cost Total Jan-01 660 60 39,600 660 60 39,600 - 60 - Feb-10 330 57 18,810 230 57 13,110 100 57 5,700 Mar-13 110 45 4,950 110 45 4,950 - 45 - Aug-21 160 65 10,400 110 65 7,150 50 65 3,250 Sep-05 570 61 34,770 335 61 20,435 235 61 14,335 Total 1,830 108,530 1,445 85,245 385 23,285 Answer 4 Calculation of Gross Profit Earned FIFO LIFO Weighted Average Specific Identification Sales 101,150 101,150 101,150 101,150 Less: Cost of Goods Sold (85,045) (85,430) (85,276) (85,245) Gross Profit 16,105 15,720 15,874 15,905 Date Sales Unit Cost Total Cost Mar-15 715 70 50,050 Sep-10 730 70 51,100 Total 1,445 101,150
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