Question

Required information [The following information applies to the questions displayed below.) Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March Units Sold at Retail Units Acquired at Cost 120 units@ $51. 40 per unit 235 units @ $56. 40 per unit 280 units@ $86.40 per unit Date Activities Mar. 1 Beginning inventory Mar. 5 Purchase Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar. 29 Sales Totals 95 units@ $61.40 per unit 170 units@ $63.40 per unit 150 units@ $96.40 per unit 430 units 620 units 4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 75 units from beginning inventory and 205 units from the March 5 purchase, the March 29 sale consisted of 55 units from the March 18 purchase and 95 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.) FIFO LIFO Avg. Cost Spec. ID Gross Margin Sales Less: Cost of goods sold Gross profit

Answer 1

Cost of goods Available for sale Cost of Goods sold Ending Inventory FIFO Cost of goods Ending Inventory Cost of No of units Cost per unit No of units Cost per unit No of units Cost per unit Available for sale goods sold 120 Beginning inventory Purchases: Mar-05 120 51.40 6168 51.40 6168 56.40 13254 235 56.40 13254 235 4605 Mar-18 95 61.40 5833 75 61.40 20 61.40 1228 Mar-25 63.40 170 10778 63.40 0 170 63.40 10778 12006 Total 190 620 36033 430 24027 Sales 38652 Less: cost of goods sold 24027 Gross profit 14625

LIFO Ending Inventory Cost of Goods sold Cost of goods Available for sale Cost of goods Cost of Ending No of units Cost per unit No of units Cost per unit No of units Cost per unit goods sold Available for sale Inventory 51.40 Beginning inventory Purchases: 51.4 120 6168 0 120 6168 9306 3948 Mar-05 235 56.40 13254 165 56.4 70 56.4 Mar-18 61.4 95 61.40 5833 95 5833 0 Mar-25 170 63.40 10778 170 63.4 10778 Total 10116 190 25917 36033 620 430 38652 Sales Less: cost of goods sold 25917 Gross profit 12735

Weighted average method Cost of goods Available for sale Cost of Goods sold Ending Inventory Cost of goods Cost of Ending Inventory No of units Cost per unit No of units Cost per unit No of units Cost per unit Available for sale goods sold Beginning inventory Purchases: 51.40 6168 120 Mar-05 235 56.40 13254 Mar-18 61.40 95 5833 63.40 Mar-25 170 10778 620 58.12 24992 Total 36033 58.12 430 190 58.12 11042 Sales 38652 24992 Less: cost of goods sold Gross profit 13660

Specific Identification Method Cost of Goods sold Cost of goods Available for sale Ending Inventory Cost of goods Cost of Ending No of units Cost per unit No of units Cost per unit No of units Cost per unit Available for sale goods sold Inventory Beginning inventory 75 51.40 6168 120 51.40 3855 45 51.40 2313 Purchases: 56.40 Mar-05 56.40 56.40 11562 235 13254 205 30 1692 61.40 61.40 63.40 Mar-18 95 61.40 5833 55 3377 40 2456 170 75 Mar-25 4755 63.40 10778 95 63.40 6023 Total 620 36033 430 24817 190 11216 Sales Less: cost of goods sold 38652 24817 Gross profit 13835