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8 April, 19:03

Three identical units of merchandise were purchased during July, as follows: Date Product T Units Cost July 3 Purchase 1 $30.00 10 Purchase 1 33.00 24 Purchase 1 36.00 Total 3 $99.00 Average cost per unit $33.00 Assume one unit sells on July 28 for $47.00. Determine the gross profit, cost of goods sold, and ending inventory on July 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) average cost flow methods.

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  1. 8 April, 19:16
    0
    Date Product Total Units Units Cost

    July 3 Purchase 1 $30.00

    10 Purchase 1 33.00

    24 Purchase 1 36.00

    Total 3 $99.00

    Average cost per unit $33.00

    Assume one unit sells on July 28 for $47.00.

    Ending Inventory

    (a) first-in, first-out, = 1 unit at $ 36 + 1 unit at $ 33 = $ 69

    (b) last-in, first-out, = 1 unit at $ 30 + 1 unit at $ 33 = $ 63

    (c) average cost flow methods = 2 units at $ 33 = $ 66

    Cost of Goods Sold

    (a) first-in, first-out, = Purchases - FIFO Ending Inventory = $ 99 - $ 69 = $ 30

    (b) last-in, first-out, = Purchases - LIFO Ending Inventory = $ 99 - $ 63 = $ 36

    (c) average cost flow methods = Purchases - Avg Cost Ending Inventory = $ 99 - $ 66 = $ 33

    Gross Profit

    (a) first-in, first-out, = Sales - FIFO CGS = $ 47-$ 30 = $17

    (b) last-in, first-out, = Sales - LIFO CGS = $ 47 - $ 36 = $11

    (c) average cost flow methods = Sales - Avg Cost CGS = $ 47 - $ 33 = $ 14
  2. 8 April, 19:20
    0
    Given that

    July 1 = 1 unit purchased at $30

    July 10 = 1 unit purchased at $33

    July 24 = 1 unit purchased at $36

    Total cost = $99

    Average cost per unit = $33

    Assuming sales of 1 unit on July 28 at $47

    A. FIFO

    gross profit = revenue - cost

    = 47 - 30

    = $17

    Cost of goods = $30

    Ending inventory = 99 - 30

    = $69

    B. LIFO

    gross profit = revenue - cost

    = 47 - 36

    = $11

    Cost of goods = $36

    Ending inventory = total cost - cost of goods sold

    = 99 - 36

    = $63

    C. Average

    Gross profit = revenue - cost

    = 47 - 33

    = $14

    Cost of goods = $33

    Ending inventory = 99 - 33

    = $66
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