Question

Chapter 05 Homeworki Saved 18 Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. Activities Units Acquired at Cost 660 units $60 per unit 330 units $57 per unit 110 units $45 per unit Units Sold at Retail Date 1 Beginning inventory Jan 1 Feb. 10 Purchase polnts Mar 13 Purchase 715 units@$70 per unit Mar. 15 Sales 160 units $65 per unit 570 units@$61 per unit Aug. 21 Purchase Sept. Sept. 10 Sales 5 Purchase 730 units $70 per unit еВok 1,830 units 1,445 units Totals Print Required: 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 660 units from beginning inventory, 230 from the February 10 purchase, 110 from the March 13 purchase, 110 from the August 21 purchase, and 335 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.) 4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.) References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute cost of goods available for sale and the number of units available for sale. Cost of goods available for sale Number of units available for sale units KRequired 1 Required 2

Answer 1

1.

given
	PARTICULARS	UNITS	AMOUNT PER UNIT	COST
Add	OPENING STOCK	660	60	39600
Add	PURCHASE	330	57	18810
Add	PURCHASE	110	45	4950
Less	SALES	715	70	50050
Add	PURCHASE	160	65	10400
Add	PURCHASE	570	61	34770
Less	SALES	730	70	51100
	balance	385
cost of goods available for sale
	OPENING STOCK			39,600.00
Add	cost of goods purchased			68,930.00
	cost of goods available for sale			1,08,530.00
no of units avaible for sale
	opening stock			660.00
Add	no of units purchased			1,170.00
	no of units avaible for sale			1,830.00

2.

	Calculation of closing inventory		no of units
	opening stock		660
Add	purchase		1170
Less	sales		1445
	closing stock		385

3.

FIFO method
	particulars	no of units	rate per unit	Amount(in $)
Add	OPENING STOCK	660	60	39,600.00
Add	PURCHASE	330	57	18,810.00
Add	PURCHASE	110	45	4,950.00
Less	SALES	715	70	50,050.00
	balance	275	57	15,675.00
		110	45	4,950.00
Add	PURCHASE	160	65	10,400.00
Add	PURCHASE	570	61	34,770.00
Less	SALES	730	70	51,100.00
	balance	385	61	23,485.00
	(cost assigned to closing inventory)
Note: FIFO method means first in first out which means goods bought in first
that is opening stock should be cleared first and then as the goods bought should be sold therefore
closing inventory will be valued at last good purchased
LIFO method
	particulars	no of units	rate per unit	Amount(in $)
Add	OPENING STOCK	660	60	39,600.00
Add	PURCHASE	330	57	18,810.00
Add	PURCHASE	110	45	4,950.00
Less	SALES	715	70	50,050.00
	balance	385	60	23,100.00
Add	PURCHASE	160	65	10,400.00
Add	PURCHASE	570	61	34,770.00
Less	SALES	730	70	51,100.00
	balance	385	60	23,100.00
	(cost assigned to closing inventory)
Note: LIFO method means last inventory bought in should be sold out first and
therefore balance of closing inventory will be based on price of opening stock

weighted average method
	particulars	no of units	rate per unit	Amount(in $)
Add	OPENING STOCK	660	60	39,600.00
Add	PURCHASE	330	57	18,810.00
Add	PURCHASE	110	45	4,950.00
Less	SALES	715	70	50,050.00
Add	PURCHASE	160	65	10,400.00
Add	PURCHASE	570	61	34,770.00
Less	SALES	730	70	51,100.00
	balance	385	59.31	22,834.35
	(cost assigned to closing inventory)
calculation of weighted cost
	no of units	cost	weighted average
OPENING STOCK	660	39600
PURCHASE	330	18810
PURCHASE	110	4950
PURCHASE	160	10400
PURCHASE	570	34770
total	1830	108530	59.30601	(108530/1830)
Note: under weighted average no of units purchased will be divided
by total amount of goods purchased

specific indentification
	particulars	no of units	rate per unit	Amount(in $)
Add	OPENING STOCK	660	60	39,600.00
Add	PURCHASE	330	57	18,810.00
Add	PURCHASE	110	45	4,950.00
Less	SALES	715	70	50,050.00
Add	PURCHASE	160	65	10,400.00
Add	PURCHASE	570	61	34,770.00
Less	SALES	730	70	51,100.00
	balance as follows	385
	balance from sep 5	235	61	14,335.00
	balance from feb 10	100	57	5,700.00
	balance from aug 21	50	65	3,250.00
	total	385	183	23,285.00
	therefore balance of closing inventory is $23,285

	ending inventory
FIFO	23,485.00
LIFO(amt in $)	23,100.00
Weighted average(amt in $)	22,834.35
Specific identification(amt in $)	23,285.00

4.

	FIFO	LIFO(amt in $)	Weighted average(amt in $)	Specific identification(amt in $)
Sales	1,01,150.00	1,01,150.00	1,01,150.00	1,01,150.00
Less: cost of goods sold	85,045.00	85,430.00	85,695.65	85,245.00
Gross profit	16,105.00	15,720.00	15,454.35	15,905.00
cost of good sold is opening stock plus purchase minus closing stock