Exercise 8-10 Inventory information for Part 311 of Pharoah Corp. discloses the
ID: 2570794 • Letter: E
Question
Exercise 8-10 Inventory information for Part 311 of Pharoah Corp. discloses the following information for the month of June. June 1 Balance 301 units $12 June 10 Sold 200 units $28 11 Purchased 804 units $14 20 Purchased 497 units @ $15 15 Sold 504 units @ $29 304 units @ $32 27 Sold Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) 1). FIFO Cost of Goods Sold Ending Inventory s LINK TO TEXT 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? The ending inventory at LIFOExplanation / Answer
Exercise 8-10
Answer a.
Number of units in Beginning Inventory = 301
Cost of Beginning Inventory = 301 * $12.00 = $3,612
Number of units purchased = 804 + 497
Number of units purchased = 1,301
Cost of Goods purchased = 804 * $14.00 + 497 * $15.00
Cost of Goods purchased = $18,711
Number of units available for sale = Number of units in Beginning Inventory + Number of units purchased
Number of units available for sale = 301 + 1,301 = 1,602
Number of units sold = 200 + 504 + 304
Number of units sold = 1,008
Number of units in Ending Inventory = Number of units available for sale - Number of units sold
Number of units in Ending Inventory = 1,602 - 1,008
Number of units in Ending Inventory = 594
FIFO:
Cost of Goods sold = 301 * $12.00 + 707 * $14.00
Cost of Goods sold = $13,510
Ending Inventory = 97 * $14.00 + 497 * $15.00
Ending Inventory = $8,813
LIFO:
Cost of Goods sold = 497 * $15.00 + 511 * $14.00
Cost of Goods sold = $14,609
Ending Inventory = 293 * $14.00 + 301 * $12.00
Ending Inventory = $7,714
Answer b.
June 10:
Number of units sold = 200
Cost of Goods Sold = 200 * $12.00
Cost of Goods Sold = $2,400
Ending Inventory = 101 * $12.00
Ending Inventory = $1,212
June 15:
Number of units sold = 504
Cost of Goods Sold = 504 * $14.00
Cost of Goods Sold = $7,056
Ending Inventory = 101 * $12.00 + 300 * $14.00
Ending Inventory = $5,412
June 27:
Number of units sold = 304
Cost of Goods Sold = 304 * $15.00
Cost of Goods Sold = $4,560
Ending Inventory = 101 * $12.00 + 300 * $14.00 + 193 * $15.00
Ending Inventory = $8,307
The Ending Inventory at LIFO is $8,307
Answer c.
FIFO:
June 10:
Number of units sold = 200
Cost of Goods Sold = 200 * $12.00
Cost of Goods Sold = $2,400
Ending Inventory = 101 * $12.00
Ending Inventory = $1,212
June 15:
Number of units sold = 504
Cost of Goods Sold = 101 * $12.00 + 403 * $14.00
Cost of Goods Sold = $6,854
Ending Inventory = 401 * $14.00
Ending Inventory = $5,614
June 27:
Number of units sold = 304
Cost of Goods Sold = 304 * $14.00
Cost of Goods Sold = $4,256
Ending Inventory = 97 * $14.00 + 497 * $15.00
Ending Inventory = $8,813
Total Cost of Goods Sold = $2,400 + $6,854 + $4,256
Total Cost of Goods Sold = $13,510
Sales Revenues = 200 * $28.00 + 504 * $29.00 + 304 * $32.00
Sales Revenues = $29,944
Gross Profit = Sales Revenues - Total Cost of Goods Sold
Gross Profit = $29,944 - $13,510
Gross Profit = $16,434
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