Question

A company sells tires and uses a perpetual inventory system. The following is available for the month: (Click the icon to view the transactions.) () Indicate gross profit for the month assuming FIFO inventory costing. Gross profit is $ using the FIFO inventory costing method. (ii) Indicate gross profit for the month assuming LIFO inventory costing Gross profit is $ L u sing the LIFO inventory costing method. (iii) Indicate gross profit for the month assuming weighted average inventory costing. (For weighted average calculations, round per unit costs to the nearest cent and all other amounts the nearest dollar.) Gross profit is $ L u sing the weighted-average inventory costing method. | i More Info Jul. 1 Beginning merchandise inventory 11 Purchase 23 Sale 26 Purchase 29 Sale 20 tires @ 12 tires @ 18 tires @ 14 tires @ 16 tires @ $ $ $ $ $ 63 each 87 each 101 each 90 each 101 each Enter any number in the edit fields and then click Check Answer.

Answer 1

Solution:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jul	20	$63.00	$1,260.00	0	$0.00	$0.00	0	$0.00	$0.00	20	$63.00	$1,260.00
11-Jul	20	$63.00	$1,260.00	12	$87.00	$1,044.00	0	$0.00	$0.00	20	$63.00	$1,260.00
										12	$87.00	$1,044.00
23-Jul	20	$63.00	$1,260.00	0	$0.00	$0.00	18	$63.00	$1,134.00	2	$63.00	$126.00
	12	$87.00	$1,044.00							12	$87.00	$1,044.00
26-Jul	2	$63.00	$126.00	14	$90.00	$1,260.00	0	$0.00	$0.00	2	$63.00	$126.00
	12	$87.00	$1,044.00							12	$87.00	$1,044.00
										14	$90.00	$1,260.00
29-Jul	2	$63.00	$126.00	0	$0.00	$0.00	2	$63.00	$126.00	12	$90.00	$1,080.00
	12	$87.00	$1,044.00				12	$87.00	$1,044.00
	14	$90.00	$1,260.00				2	$90.00	$180.00
Total							34		$2,484.00	12		$1,080.00

Computation of ending inventory COGS under LIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jul	20	$63.00	$1,260.00	0	$0.00	$0.00	0	$0.00	$0.00	20	$63.00	$1,260.00
11-Jul	20	$63.00	$1,260.00	12	$87.00	$1,044.00	0	$0.00	$0.00	20	$63.00	$1,260.00
										12	$87.00	$1,044.00
23-Jul	20	$63.00	$1,260.00	0	$0.00	$0.00	12	$87.00	$1,044.00	14	$63.00	$882.00
	12	$87.00	$1,044.00				6	$63.00	$378.00
26-Jul	14	$63.00	$882.00	14	$90.00	$1,260.00	0	$0.00	$0.00	14	$63.00	$882.00
										14	$90.00	$1,260.00
29-Jul	14	$63.00	$882.00	0	$0.00	$0.00	14	$90.00	$1,260.00	12	$63.00	$756.00
	14	$90.00	$1,260.00				2	$63.00	$126.00
Total							34		$2,808.00	12		$756.00

Computation of ending inventory COGS under Weighted Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Jul	20	$63.00	$1,260	0	$0.00	$0	0	$0.00	$0	20	$63.00	$1,260
11-Jul	20	$63.00	$1,260	12	$87.00	$1,044	0	$0.00	$0	32	$72.00	$2,304
23-Jul	32	$72.00	$2,304	0	$0.00	$0	18	$72.00	$1,296	14	$72.00	$1,008
26-Jul	14	$72.00	$1,008	14	$90.00	$1,260	0	$0.00	$0	28	$81.00	$2,268
29-Jul	28	$81.00	$2,268	0	$0.00	$0	16	$81.00	$1,296	12	$81.00	$972
Total							34		$2,592	12		$972

Income Statement
Particulars	Weighted Average	FIFO	LIFO
Sales	$3,434	$3,434	$3,434
Cost of goods sold	$2,592	$2,484	$2,808
Gross Profit (Sales - COGS)	$842	$950	$626