3 P6-34B Accounting for inventory using the perpetual invent ory systemEO FIFO,

Question

3 P6-34B Accounting for inventory using the perpetual invent ory systemEO FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average 40 Steel It began January with 55 units of iron inventory that cost $35 each. During January the company completed the following inventory transactions: Unit Sales Price Units 45 75 70 10 Unit Cost Jan. 3 Sale $ 83 8 Purchase 21 Sale 30 Purchase $ 52 85 Requirements 1. Prepare a perpetual inventory record for the merchandise inventory using the 2. Prepare a perpetual inventory record for the merchandise inventory using the 3. Prepare a perpetual inventory record for the merchandise inventory using the 4. Determine the company's cost of goods sold for January using FIFO, LIFO, and 5. Compute gross profit for January using FIFO, LIFO, and weighted-average inven- 6. If the business wanted to maximize gross profit, which method would it select? FIFO inventory costing method LIFO inventory costing method weighted-average inventory costing method. weighted-average inventory costing methods. tory costing methods.

Explanation / Answer

Req 1 STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL FIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 55 35 1925 3-Jan 45 35 1575 10 35 350 8-Jan 75 52 3900 10 35 350 75 52 3900 21-Jan 10 35 350 60 52 3120 15 52 780 30-Jan 10 55 550 15 52 780 10 55 550 TOTAL 85 4450 115 5045 25 1330 Req 2: STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL LIFO METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 55 35 1925 3-Jan 45 35 1575 10 35 350 8-Jan 75 52 3900 10 35 350 75 52 3900 21-Jan 70 52 3640 10 35 350 5 52 260 30-Jan 10 55 550 10 35 350 5 52 260 10 55 550 TOTAL 85 4450 115 5215 25 1160 Req 3: STATEMENT SHOWING INVENTORY RECORD UNDER PERPETUAL WEIGHTED AVERAGE METHOD RECIEPTS COST OF GOODS SOLD BALANCE DATE UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ UNITS RATE AMOUNT $ 1-Jan 55 35 1925 3-Jan 45 35 1575 10 35 350 8-Jan 75 52 3900 10 35 350 75 52 3900 Average 85 50 4250 21-Jan 70 50 3500 15 50 750 30-Jan 10 55 550 15 50 750 10 55 550 TOTAL 85 4450 115 5075 25 52 1300 Req 4: COGS FIFO 5045 LIFO 5215 Weighted Average 5075 Req 5: FIFO LIFO Average Sales (45 units @$83+70 units @85) 9685 9685 9685 Less: COGS 5045 5215 5075 Ggross profit 4640 4470 4610 Req 6: FIFO method maximize gross profit

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