1) Consider that periodic inventory documents are upkept, calculate the COGS and
ID: 2547684 • Letter: 1
Question
1) Consider that periodic inventory documents are upkept, calculate the COGS and final inventory for May 2015 using (a) LIFO, (b) FIFO, and (c) Average Cost.
2) Consider that perpetual inventory documents are upkept, calculate the COGS and final inventory for May 2015 using (a) LIFO and (b) FIFO.
3) Consider that Chapman had used the FIFO perpetua system, calculate the gross profit for May 2015.
Purchases Sales 2,000 $10.00 1,500 10.05 600 10.50 900 11.00 1,200@ 11.00 300@ 11.10 500 $21.00 1,600 22.00 700 @ 22.00 1,800 @ 21.00 700 23.00 1 (balance on hand) 18 15 20 5,300 6,500Explanation / Answer
1. Periodic Inventory System
(a) LIFO
Units available for sale = 2000 + 1500 + 600 + 900 + 1200 + 300 = 6500
Units sold = 500 + 1600 + 700 + 1800 + 700 = 5300
Ending Inventory = 6500 - 5300 = 1200 units
Cost of ending inventory = 1,200 units x $10 = $12,000
Cost of Goods Sold = Total cost - cost of ending inventory
= $67,805 - $12,000 = $55,805
(b) FIFO
Cost of ending inventory = (900 units x $11) + (300 units x $11.10)
= $9,900 + $3,330 = $13,230
Cost of goods sold = $67,805 - $13,230 = $54,575
(c) Average Cost
Average cost per unit = $67,805 / 6,500 = $10.43
Cost of goods sold = 5,300 units x $10.43 = $55,279
2. Perpetual Inventory System
(a) LIFO
2000 x $10 = $20,000
1500 x $10.05 =$15,075
2000 x $10 = $20,000
1000 x $10.05=$10,050
2000 x $10 = $20,000
1000 x $10.05=$10,050
600 x $10.50= $6,300
600 x $10.50 = $6,300
1000 x $10.05=$10,050
1300 x $10 = $13,000
900 x $11 = $9,900
900 x $11 = $9,900
900 x $10 = $9,000
400 x $10 = $4,000
1200 x $11 = $13,200
400 x $10 = $4,000
1200 x $11 = $13,200
300 x $11.10 = $3,330
300 x $11.10=$3,330
400 x $11 = $4,400
400 x $10 = $4,000
800 x $11 = $8,800
COGS = $55,005
Final Inventory = $12,800
(b) FIFO
2000 x $10 = $20,000
1500 x $10.05 =$15,075
1500 x $10 = $15,000
1500 x $10.05=$15,075
1500 x $10 = $15,000
1500 x $10.05=$15,075
600 x $10.50= $6,300
1500 x $10 = $15,000
100 x $10.05=$10,05
1400 x $10.05 = $14,070
600 x $10.50 =$6,300
700 x $10.05 = $7,035
600 x $10.50 = $6,300
700x $10.05 = $7,035
600 x $10.50 = $6,300
900 x $11 = $9,900
700 x $10.05 = $7,035
600 x $10.50 = $6,300
500 x $11 = $5,500
400 x $11 = $4,400
1200 x $11 = $13,200
400 x $11 = $4,400
1200 x $11 = $13,200
300 x $11.10 = $3,330
400 x $11=$4,400
300 x $11 = $3,300
900 x $11 = $9,900
300 x $11.10 = $3,330
COGS = $54,575
Final Inventory = $13,200
3) Gross profit = Sales - COGS
Sales = (500 x 21) + (1600 x 22) + (700 x 22) + (1800 x 21) + (700 x 23)
= $10,500 + $35,200 + $15,400 + $37,800 + $16,100 = $115,000
Gross Profit = $115,000 - $54,575 = $60,425
Date Units per unit cost Total Cost May 1 Balance on hand 2,000 $10 $20,000 May 2 Purchase 1,500 $10.05 $15,075 May 7 Purchase 600 $10.50 $6,300 May 15 Purchase 900 $11 $9,900 May 20 Purchase 1,200 $11 $13,200 May 27 Purchase 300 $11.10 $3,330 Total 6,500 $67,805Related Questions
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