Question

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March Units sold at Retail Date Activities Mar. 1 Beginning inventory Mar 5 Purchase Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar. 29 Sales Totals Units Acquired at Cost 248 units@ $53.8e pecunit 295 units@ $58.8e ped unit 155 units @ $63.89 per unit 298 units@ $65.88 per unit 400 units @ $88.80 per unit 270 units @ $98.89 per unit 670 units 989 units

Answer 1

Ans. 1 Units 240 Cost of goods available for sale Cost per unit $53.80 Total cost $12,912 295 Beginning inventory Purchases: 5-Mar 18-Mar 25-Mar Total Cost of goods available for sale 155 290 $58.80 $63.80 $65.80 $17,346 $9,889 $19,082 $59,229 980 Ans. 2 Ending inventory units = Units available for sale - Total units sold 980 - 670 310 units Ans. 4 Sales |- Cost of goods sold Gross margin FIFO $62, 196 $38,871 $23,325 LIFO $62, 196 -$40,761 $21,435 Weighted average $62, 196 -$39,664 $22,532 Specific identification $62, 196 $40,381 $21,815 *Calculation of sales: Date 9- Mar 29-Mar Total sales Units 400 270 Rate $88.80 $98.80 Total $35,520 $26,676 $62,196

Ans. A Perpetual FIFO: Goods Purchased # of Units Cost per unit Cost of goods sold Cost per unit # of units sold Cost of goods sold Date 1-Mar 5-Mar # of Units 240 240 295 Inventory Balance Cost per unit Inventory Balance $53.80 $12,912 $53.80 $12,912 $58.80 $17,346 295 $58.80 9-Mar 240 160 $53.80 $58.80 $12,912 $9,408 18-Mar 155 $63.80 135 135 155 135 155 290 $58.80 $58.80 $63.80 $58.80 $63.80 $65.80 $7,938 $7,938 $9,889 $7,938 $9,889 $19,082 25-Mar 290 $65.80 29-Mar 135 135 $58.80 $63.80 $7,938 $8,613 20 $63.80 290 $65.80 Ending inventory $1,276 $19,082 $20,358 $38,871 Total Cost of goods sold *In FIFO method the units that have purchased first (earliest), are released the first one and the ending inventory units remain from the last (recent) purchases. Ans. B Perpetual LIFO: Goods Purchased # of Units Cost per unit Cost of goods sold Cost per unit # of units sold Cost of goods sold Date 1-Mar 5-Mar # of Units 240 240 295 Inventory Balance Cost per unit Inventory Balance $53.80 $12,912 $53.80 $12,912 $58.80 $17,346 295 $58.80 9-Mar 295 105 $58.80 $53.80 $17,346 $5,649 18-Mar 155 $63.80 25-Mar 290 $65.80 135 $53.80 135 $53.80 155 $63.80 135 $53.80 155 $63.80 290 $65.80 135 $53.80 155 $63.80 20 $65.80 Ending inventory $7,263 $7,263 $9,889 $7,263 $9,889 $19,082 $7,263 $9,889 $1,316 $18,468 29-Mar 270 $65.80 $17,766 $40,761 Total Cost of goods sold *In LIFO method the units that have purchased last, are released the first one and the ending inventory units remain from the first purchases.

Ans. C Weighted Average : Goods Purchased # of Units Cost per unit Cost of goods sold Cost per unit # of units sold Cost of goods sold Date 1-Mar 5-Mar 295 $58.80 # of Units 240 240 295 535 135 Average 9-Mar 18-Mar 400 $56.56 $22,623 Inventory Balance Cost per unit Inventory Balance $53.80 $12,912 $53.80 $12,912 $58.80 $17,346 $56.56 $30,258 $56.56 $7,635 $56.56 $7,635 $63.80 $9,889 $60.43 $17,524 $60.43 $17,524 $65.80 $19,082 $63.11 $36,606 $63.11 $19,565 155 $63.80 Average 25-Mar 135 155 290 290 290 290 $65.80 Average 29-Mar 580 310 270 $63.11 $17,041 Total Cost of goods sold $39,664 Ending inventory $19,565 *Weighted average rate is calculated by using the formula of (Total available balance / Total units available). Ans. D Specific identification Goods Purchased # of Units Cost per unit Cost of goods sold Cost per unit # of units sold Cost of goods sold Date 1-Mar 5-Mar 295 $58.80 # of Units 240 240 295 105 30 105 9-Mar 135 265 $53.80 $58.80 $7,263 $15,582 18-Mar 155 $63.80 Inventory Balance Cost per unit Inventory Balance $53.80 $12,912 $53.80 $12,912 $58.80 $17,346 $53.80 $5,649 $58.80 $1,764 $53.80 $5,649 $58.80 $1,764 $63.80 $9,889 $53.80 $5,649 $58.80 $1,764 $63.80 $9,889 $65.80 $19,082 $53.80 $5,649 $58.80 $1,764 $63.80 $2,552 $65.80 $8,883 25-Mar 290 30 155 105 30 155 290 105 30 $65.80 29-Mar 115 155 $63.80 $65.80 $7,337 $10,199 40 135 Total Cost of goods sold $40,381 Ending inventory $18,848

Ending inventory units = Total units available - Total units sold
Purchase date	Units available (a)	Sold units (b)	Ending inventory (a-b)
1-Mar	240	135	105
5-Mar	295	265	30
18-Mar	155	115	40
25-Mar	290	155	135