Camo SurplusCamo Surplus began JulyJuly 20162016 with 7070 tents that cost ?$101

Question

Camo SurplusCamo Surplus

began

JulyJuly

20162016

with

7070

tents that cost

?$1010

each. During the? month,

Camo SurplusCamo Surplus

made the following purchases at? cost:

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?(Click the icon to view the? purchases.)

Camo SurplusCamo Surplus

sold

240240

?tents, and at

JulyJuly

?31, the ending inventory consists of

6060

tents. The sale price of each tent was

$ 55$55.

Requirements

1.

JulyJuly

2.

Explain why cost of goods sold is highest under LIFO. Be specific.

3.

Camo SurplusCamo Surplus

JulyJuly.

$ 2 comma 750$2,750.

Camo SurplusCamo Surplus

3636?%.

Requirement 1. Determine the cost of goods sold and ending inventory amounts for

JulyJuly

under the average? cost, FIFO? cost, and LIFO cost. Round average cost per unit to two decimal? places, and round all other amounts to the nearest dollar.

July

6

80 tents

@

$15

=

$1,200

18

100 tents

@

$24

=

2,400

26

50 tents

@

$28

=

1,400

1.

Determine the cost of goods sold and ending inventory amounts for

JulyJuly

under the average? cost, FIFO? cost, and LIFO cost. Round average cost per unit to two decimal? places, and round all other amounts to the nearest dollar.

2.

Explain why cost of goods sold is highest under LIFO. Be specific.

3.

Prepare the

Camo SurplusCamo Surplus

income statement for

JulyJuly.

Report gross profit. Operating expenses totaled

$ 2 comma 750$2,750.

Camo SurplusCamo Surplus

uses average costing for inventory. The income tax rate is

3636?%.

Explanation / Answer

  

Date Particulars Units Rate Per unit($) Amount Opening Stock 70 10 700 July 6th Purchases 80 15 1200 July 18th " 100 24 2400 July 26th " 50 28 1400 Total 300 5700 Cost of Goods Sold and Ending Inventory 1 Average Cost(Simple Average) Cost Per Unit 19 Units Avg Cost Total Cost Cost of Goods Sold 240 19 4560 Closing Inventory 60 19 1140 2 First in First Out(FIFO) Units Rate per unit Total Amount Cost of Goods sold Opening 70 10 700 "july 6th 80 15 1200 "july 18th 90 24 2160 Total 240 4060 Closing Inventory "july 18th 10 24 240 "july 26th 50 28 1400 Total 60 1640 3 Last In first Out (LIFO) Units Rate per unit Total Amount Cost of Goods Sold Total Units Sold 240 "jul 26th 50 28 1400 "jul 18th 100 24 2400 "jul 6th 80 15 1200 Opening 10 10 100 Total 240 5100 Closing Inventory Opening 60 10 600 4 Income Statement Under Average Cost Method Amount($) Sales (240*$55) 13200 Less: CGS (240*$19) 4560 Operating Expenses 2750 Net Profit Before Tax 5890 Less: Income Tax @36% 2120.4 PAT 3770 5 Closing Stock Inventory Under Lifo Is less when compared to FIFO,and Average due to the Purchase price of Tents have increasing trend due to which the cost of Iventory under LIFO is low,Because under LIFO Latest Stock Is used First then Stock purchased earlier at lesser price will be in Stock.

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