Question

Montoure Company uses a periodic inventory system. It entered into the following calendar year purchases and sales transactions. Date Activities Jan. 1 Beginning Units Sold at Retail inventory Feb. 10 Purchase Units Acquired at Cost 650 units@ $60.00 per unit 425 units@ $57.00 per unit 225 units @ $42.00 per unit Mar. 13 Purchase Mar. 15 Sales 825 units its@ $90.00 per unit Aug. 21 Purchase 150 units unit a unit @ $65.00 per Sept. 5 Purchase 550 units@ $61.00 per unit Sept. 10 Sales 700 units @ $90.00 per unit 1,525 units Totals 2,000 units < Prev 2 of 3 Next >

Answer 1

425 250 175 Ans3a: Perpetual inventory System: In this system, the cost of sales and inventories are updated on every sales and purchase transactions. First in, first out method (FIFO): In this method it is assumed that inventory which is purchased first will be sold first and the inventory will consist of recent purchases. Purchase Cost of Good Sold Perpetual FIFO Ending inventory-Perpetual FIFO Perpetual FIFO No of Unit Cost Per Unit Total No of Unit Cost Per Unit Total No of Unit Cost Per Unit Total Jan'1 650 $60.00 $39,000.00 Feb'10 $57.00 $24,225.00 650 $60.00 $39,000.00 425 $57.00 $24,225.00 1075 $63,225.00 Mar 13 225 $42.00 $9,450.00 650 $60.00 $39,000.00 425 $57.00 $24,225.00 225 $42.00 $9,450.00 1300 $72,675.00 Mar 15 650 $60.00 $39,000.00 $57.00 $14,250.00 $57.00 $9,975.00 225 $42.00 $9,450.00 475 $23,700.00 Aug 21 $65.00 $9,750.00 250 $57.00 $14,250.00 225 $42.00 $9,450.00 150 $65.00 $9,750.00 625 $33,450.00 Sep 5 $61.00 $33,550.00 250 $57.00 $14,250.00 225 $42.00 $9,450.00 150 $65.00 $9,750.00 550 $61.00 $33,550.00 1175 $67,000.00 Sep 10 250 $57.00 $14,250.00 475 $61.00 $28,975.00 225 $42.00 $9,450.00 150 $65.00 $9,750.00 75 $61.00 $4,575.00 Total $76,975.00 1525 $87,000.00 Inventory Cost $61.00 $28,975.00 Cost of good Sold $87,000.00 Ending Inventory $28,975.00

650 475 Ans3b: Last in, first out method (LIFO): In this method it is assumed that inventory which is purchased last will be sold first and the inventory will consist of old purchases. Purchase Cost of Good Sold Perpetual LIFO Perpetual LIFO Ending inventory-Perpetual LIFO No of Unit Cost Per Unit Total No of Unit Cost Per Unit Total No of Unit Cost Per Unit Total Jan'1 650 $60.00 $39,000.00 Feb'10 425 $57.00 $24,225.00 650 $60.00 $39,000.00 425 $57.00 $24,225.00 1075 $63,225.00 Mar'13 $42.00 $9,450.00 $60.00 $39,000.00 425 $57.00 $24,225.00 225 $42.00 $9,450.00 1300 $72,675.00 Mar 15 225 $42.00 $9,450.00 $60.00 $28,500.00 $57.00 $24,225.00 175 $60.00 $10,500.00 Aug 21 150 $65.00 $9,750.00 $60.00 $28,500.00 150 $65.00 $9,750.00 625 $38,250.00 Sep'5 550 $61.00 $33,550.00 475 $60.00 $28,500.00 150 $65.00 $9,750.00 550 $61.00 $33,550.00 1175 $71,800.00 Sep'10 $61.00 $33,550.00 475 $60.00 $28,500.00 150 $65.00 $9,750.00 Total 1350 $76,975.00 1525 $87,475.00 inventory Cost 475 $60.00 $28,500.00 Cost of good Sold $87,475.00 Ending Inventory $28,500.00 475 550

Ans3c: In weighted average cost method per unit cost is derived by dividing total cost of goods available for sale by total units available at each transaction of sale or purchase. Perpetual Purchase Cost of Good Sold Ending inventory Weighted No of Unit Cost Per Unit Total No of Unit Cost Per Unit Total No of Unit Cost Per Unit Jan'1 650 $60.00 Feb'10 425 $57.00 $24,225.00 650 $60.00 425 $57.00 Average 1075 $58.81 Mar'13 225 $42.00 $9,450.00 1075 $58.81 225 $42.00 Average 1300 $55.90 Mar'15 825 $55.90 $46,121.00 $55.90 Aug 21 150 $65.00 $9,750.00 $55.90 $65.00 Average $58.09 Sep's 550 $61.00 $33,550.00 $58.09 550 $61.00 Average 1175 $59.45 700 $59.45 $41,615.00 475 $59.45 Total 1350) $76,975.00 1525 $87,736.00 inventory Cost 4751 $59.45 Cost of good Sold $87,736.00 Ending Inventory $28,239.00 Total $39,000.00 $39,000.00 $24,225.00 $63,225.00 $63,225.00 $9,450.00 $72,675.00 $26,554.00 $26,554.00 $9,750.00 $36,304.00 $36,304.00 $33,550.00 $69,854.00 $28,239.00 Sep 10 $28,239.00

Ans3d: Specific Identification: This method refers the tracking and costing of inventory based on the movement of specific, identifiable inventory items in and out of stock. Specific Purchase Cost of Good Sold Ending inventory Identification No of Unit Cost Per Unit Total No of Unit Cost Per Unit it . Total No of Unit Cost Per Unit Jan'1 650 $60.00 Feb'10 425 $57.00 $24,225.00 650 $60.00 425 $57.00 1075 Mar 13 $42.00 $9,450.00 650 $60.00 425 $57.00 225 $42.00 1300 Mar 15 650 $60.00 $39,000.00 250 $57.00 175 $57.00 $9,975.00 225 $42.00 825 $48,975.00 475 Aug 21 $65.00 $9,750.00 250 $57.00 225 $42.00 150 $65.00 625 Sep 5 550 $61.00 $33,550.00 250 $57.00 $42.00 150 $65.00 550 $61.00 1175 Sep 10 $57.00 $5,700.00 150 $57.00 $42.00 $9,450.00 $65.00 $4,875.00 $65.00 300 $61.00 $18,300.00 250 $61.00 700 $38,325.00 475 Total 1350 $76,975.00 1525 $87,300.00 inventory Cost Cost of good Sold $87,300.00 Ending Inventory $28,675.00 Total $39,000.00 $39,000.00 $24,225.00 $63,225.00 $39,000.00 $24,225.00 $9,450.00 $72,675.00 $14,250.00 $9,450.00 $23,700.00 $14,250.00 $9,450.00 $9,750.00 $33,450.00 $14,250.00 $9,450.00 $9,750.00 $33,550.00 $67,000.00 $8,550.00 225 100 $4,875.00 $15,250.00 $28,675.00 $28,675.00

Ans4: Particulars FIFO LIFO Sales [(825 x $90)+(700 x $90)] Less: Cost of Good Sold Gross Profit $1,37,250.00 ($87,000.00) $50,250.00 $1,37,250.00 ($87,475.00) $49,775.00 Weighted Average $1,37,250.00 ($87,736.00) $49,514.00 Specific Identification $1,37,250.00 ($87,300.00) $49,950.00