Inventory information for Part 311 of Monique Aaron Corp. discloses the followin

Question

Inventory information for Part 311 of Monique Aaron Corp. discloses the following information for the month of June.

Inventory information for Part 311 of Monique Aaron Corp. discloses the following information for the month of June. Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) UFO and (2) FIFO. Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the value of the ending inventory at LIFO? Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

Explanation / Answer

FIFO

Ending inventory in units = Beginning inventory + Purchases – Sales = 300 + 1298 - 998= 600

Total Purchases in units = 801 + 497 = 1298

Total Sales in units = 195+503+300 = 998

497 units @ $15 = 7455

103 units @ $ 14 = 1442

Ending Inventory in dollars = $8897

Cost of goods sold (COGS) = (Beginning inventory + Purchases) – Ending inventory = 3600 + 18669 - 8897 =   $13372

Beginning Inventory = 300 units @ $12 = 3600

Purchases = 801units * $14 + 497 units * $15 = 11214 + 7455 = 18669

LIFO

Ending inventory in units = Beginning inventory + Purchases – Sales = 300 + 1298 - 998= 600

Ending inventory in Dollars = $7800

300 units @ $12 = 3600

300 units @ $14 = 4200

Cost of goods sold (COGS) = (Beginning inventory + Purchases) – Ending inventory

= 3600 + 18669 - 7800 = 14469

ENDING INVENTORY UNDER LIFO IN PREPETUAL INVENTORY METHOD

105 * $12= 1260

801units * $14= 11214

503units * $14= 7042

105 * $12= 1260

298units * $14= 4172

105 * $12= 1260

298units * $14= 4172

497units * $15 =7455

105 * $12= 1260

298units * $14= 4172

197units * $15 =2955

Ending Inventory in Dollars = 1260 + 4172 + 2955 = $ 8387

GROSS PROFIT

Ending Inventory in FIFO

105 * $12= 1260

801units * $14= 11214

105units * $12 = 1260

398 units * $14=5572

403units * $14 = 5642

403units * $14 = 5642

497units * $15 =7455

103units * $14= 1442

497units * $15 =7455

Cost of good sold = 195units * $12 +105units * $12+ 398 units * $14 + 300units* $14

= 2340 + 1260 + 5572 + 4200 = 13372

Sales = 195 * 29 + 503 * 30 + 300 *32= 5655 + 15090 + 9600 = 30345

Sales - Cost of good sold = GROSS PROFIT

30345 - 13372 = 16973 = GROSS PROFIT

Date Purchases Sales Balance June1 Beginning Inventory 300 * 12 = 3,600 June 10 195units * $12 =2340 105 * $12= 1260 June11 801units * $14= 11214

105 * $12= 1260

801units * $14= 11214

June 15

503units * $14= 7042

105 * $12= 1260

298units * $14= 4172

June 20 497units * $15 =7455

105 * $12= 1260

298units * $14= 4172

497units * $15 =7455

June 27 300units* $15 = 4500

105 * $12= 1260

298units * $14= 4172

197units * $15 =2955

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