Ruston Company had 600 units in inventory at the beginning of November, each ass
ID: 2555837 • Letter: R
Question
Ruston Company had 600 units in inventory at the beginning of November, each assigned a $10 unit cost. Ruston also made the following purchases of inventory and sales of inventory during November.
Purchases during November
Nov 6 175 units at $11
Nov 14 250 units at $12
Nov 16 500 units at $13
Nov 28 325 units at $14
Sales in November
Nov 4 375 units sold for $20
Nov 8 200 units sold for $20
Nov 17 400 units sold for $20
Nov 24 320 units sold for $20
Instructions
Compute the April 30 ending inventory and April cost of goods sold as well as the amount of reported gross profit under the different cost flow assumptions and inventory tracking systems. Please provide calcuations.
Purchase Sales DATE Activity Number Units Unit Cost Total Purchase Number Units Unit Sales Price Total Sales 11-1 Beginning Inventory 600 $10 $6,000 -- -- 11-4 SALE -- -- 375 $20 $7,500 11-6 Purchase 175 $11 $1,925 -- -- 11-8 SALE -- -- 200 $20 $4,000 11-14 Purchase 250 $12 $3,000 -- -- 11-16 Purchase 500 $13 $6,500 -- -- 11-17 SALE -- -- 400 $20 $8,000 11-24 SALE -- -- 320 $20 $6,400 11-28 Purchase 325 $14 $4,550 -- --Explanation / Answer
AVERAGE COST PERPETUAL METHOD Purchase Sales Ending Inventory DATE Activity Number Units Unit Cost Total Purchase Number Units Cost of goods sold per unit Total cost of goods sold Total Sales Number Rate Amount 1-Nov Beginning Inventory 600 $10 $6,000 -- -- 600 $10 $6,000 4-Nov SALE -- -- 375 $10 $3,750 $7,500 225 $10 $2,250 11-6 Purchase 175 $11 $1,925 -- -- 400 $10.44 $4,175 (2250+1925) 8-Nov SALE -- -- 200 $10.44 $2,088 $4,000 200 $10.44 $2,087.50 14-Nov Purchase 250 $12 $3,000 -- -- 450 $11.31 $5,087.50 (2087.50+3000) 16-Nov Purchase 500 $13 $6,500 -- -- 950 $12.20 $11,587.50 (5087.50+6500) 17-Nov SALE -- -- 400 $12.20 $4,879 $8,000 550 $12.20 $6,708.55 24-Nov SALE -- -- 320 $12.20 $3,903.16 $6,400 230 $12.20 $2,805.39 28-Nov Purchase 325 $14 $4,550 -- 555 $13.25 $7,355.39 (2805+4550) TOTAL 1850 $21,975 $14,620.11 $25,900 Ending Inventory $7,355.39 Cost of goods sold $14,620 Gross Profit $11,280 (25900-14620) AVERAGE COST PERIODIC INVENTORY METHOD Quantity of beginning inventory 600 Quantity Purchased 1250 Total Available 1850 Quantity sold 1295 21975 Ending Inventory 555 6592.5 AverageCost of ending Inventory per unit $11.88 (17425/1850) 15382.5 Cost of ending inventory $6,592.50 (9.42*555) Cost of Purchase $15,975 21975-6000) Cost of beginning Inventory $6,000 Cost of goods sold $15,382.50 (15975+6000-6592.50) Gross Profit $10,517.50 (25900-15382.50) FIFO PERPETUAL METHOD Purchase Sales Ending Inventory DATE Activity Number Units Unit Cost Total Purchase Number Units Cost of goods sold per unit Total cost of goods sold Total Sales Number Rate Amount 1-Nov Beginning Inventory 600 $10 $6,000 -- -- 600 $10 $6,000 4-Nov SALE -- -- 375 $10 $3,750 $7,500 225 $10 $2,250 11-6 Purchase 175 $11 $1,925 -- -- 225 $10.00 $2,250 175 $11.00 $1,925 8-Nov SALE -- -- 200 $10.00 $2,000 $4,000 25 $10.00 $250.00 175 $11.00 $1,925.00 14-Nov Purchase 250 $12 $3,000 -- -- 25 $10.00 $250.00 175 $11.00 $1,925.00 250 $12.00 $3,000.00 16-Nov Purchase 500 $13 $6,500 -- -- 25 $10.00 $250.00 175 $11.00 $1,925.00 250 $12.00 $3,000.00 500 $13.00 $6,500.00 17-Nov SALE -- -- 25 $10.00 $250 $8,000 50 $12.00 $600.00 175 $11.00 $1,925 500 $13.00 $6,500.00 200 $12.00 $2,400 24-Nov SALE -- -- 50 $12.00 $600.00 $6,400 230 $13.00 $2,990.00 270 $13.00 $3,510.00 28-Nov Purchase 325 $14 $4,550 -- 230 $13.00 $2,990.00 $21,975 Total $14,435.00 325 $14 $4,550.00 Ending Inventory $7,540.00 (2990+4550) Cost of goods sold $14,435 Gross Profit $11,465 (25900-14435) FIFO PERIODIC INVENTORY METHOD Cost of ending inventory $7,540.00 (325*14+230*13) Beginning Inventory+Purchase $21,975.00 Cost of goods sold $14,435.00 (21975-7540) Gross Profit $11,465.00 (25900-14435) LIFO PERPETUAL METHOD Purchase Sales Ending Inventory DATE Activity Number Units Unit Cost Total Purchase Number Units Cost of goods sold per unit Total cost of goods sold Total Sales Number Rate Amount 1-Nov Beginning Inventory 600 $10 $6,000 -- -- 600 $10 $6,000 4-Nov SALE -- -- 375 $10 $3,750 $7,500 225 $10 $2,250 11-6 Purchase 175 $11 $1,925 -- -- 225 $10.00 $2,250 175 $11.00 $1,925 8-Nov SALE -- -- 175 $11.00 $1,925 $4,000 200 $10.00 $2,000.00 25 $10.00 $250 14-Nov Purchase 250 $12 $3,000 -- -- 200 $10.00 $2,000.00 250 $12.00 $3,000.00 16-Nov Purchase 500 $13 $6,500 -- -- 200 $10.00 $2,000.00 250 $12.00 $3,000.00 500 $13.00 $6,500.00 17-Nov SALE -- -- 400 $13.00 $5,200 $8,000 200 $10.00 $2,000.00 250 $12.00 $3,000.00 100 $13.00 $1,300.00 24-Nov SALE -- -- 100 $13.00 $1,300.00 $6,400 200 $10.00 $2,000.00 220 $12.00 $2,640.00 30 $12.00 $360.00 28-Nov Purchase 325 $14 $4,550 -- 200 $10.00 $2,000.00 30 $12.00 $360.00 325 $14.00 $4,550.00 $21,975 Total $15,065.00 555 $6,910.00 (Emding Inventory Ending Inventory $6,910.00 Cost of goods sold $15,065 Gross Profit $10,835 (25900-15065) LIFO PERIODIC INVENTORY METHOD Cost of ending inventory $5,550.00 (555*10) Beginning Inventory+Purchase $21,975.00 Cost of goods sold $16,425.00 (21975-5550) Gross Profit $9,475.00 (25900-16425)
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