Question #3 Warnerwoods Company uses a perpetual inventory system. It entered in
ID: 2339271 • Letter: Q
Question
Question #3 Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. (For specific identification, the March 9 sale consisted of 80 units from beginning inventory and 340 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 120 units from the March 25 purchase.) Date Units Acquired at Cost Units Sold at Rotail Mar I Mar 5 Purchase Mar. 9 Sales Mar. 18 Purchase. 100 units @ $50.00 per unit 400 units $55.00 per unit inventory 420 units @ $85.00 per unit 120 units @ $60.00 per unit 200 units @$62.00 per unit Mar: 29 Sales 160 units@ $95.00 per unit 580 units 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. (Round all amounts to cents.) Compute gross profit earned by the company for each of the four costing methods in part 3 4.Explanation / Answer
Cost of Goods Available for Sale # of units Cost per Unit Cost of Goods Available for Sale Beginning inventory 100 $50.00 $5,000 Purchases: 5-Mar 400 55 $22,000 18-Mar 120 60 $7,200 25-Mar 200 62 $12,400 Total 820 $46,600 2 Ending inventory 240 units 820 purchases- 420 sales - 160 sales 3 Perpetual FIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance 1-Mar 100 50 5000 March 5 400 $55.00 100 50 $ 5,000 400 $55.00 $22,000 $27,000 9-Mar 100 50 5000 320 55 17600 80 55 4400 22600 18-Mar 120 $60.00 80 55 4400 120 $60.00 $7,200.00 $11,600.00 25-Mar 200 $62.00 80 55 4400 120 $60.00 $7,200.00 200 62 $12,400.00 $24,000.00 29-Mar 80 55 4400 40 60 2400 80 60 4800 200 62 12400 9200 14800 31800 14800 LIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance 1-Mar 100 $50.00 $5,000.00 March 5 400 $55.00 100 50 5000 400 55 22000 27000 9-Mar 20 50 1000 80 50 4000 400 55 22000 4000 23000 18-Mar 120 $60.00 80 50 4000 120 60 7200 11200 25-Mar 200 $62.00 80 50 4000 120 60 7200 200 62 12400 29-Mar 160 62 9920 80 50 4000 120 60 7200 40 62 2480 9920 13680 Totals 32920 13680 Weighted Average Perpetual: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance 1-Mar 100 $50.00 $5,000 March 5 400 $55.00 100 50 $5,000 400 55 $22,000 Average 500 $54.00 $27,000 9-Mar 420 $54.00 $22,680.00 80 $54.00 $4,320 March 18 120 $60.00 80 54 $4,320 120 60 $7,200 Average 200 $57.60 $11,520 25-Mar 200 $62.00 80 54 $4,320 120 60 $7,200 200 62 $12,400 $400 $59.80 $23,920 29-Mar 160 $59.80 $9,568.00 $240 $59.80 $14,352 Totals 32248 $14,352 Specific Identification: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance 1-Mar 100 $50.00 $5,000 March 5 400 $55.00 100 50 $5,000 400 55 $22,000 $27,000 9-Mar 80 $50.00 $4,000.00 20 50 1000 340 55 $18,700.00 60 55 3300 22700 18-Mar 120 $60.00 20 50 1000 60 55 3300 120 60 7200 25-Mar 200 $62.00 20 50 1000 60 55 3300 120 60 7200 200 62 12400 29-Mar 40 60 2400 20 50 1000 120 62 7440 60 55 3300 9840 80 60 4800 80 62 4960 14060 Totals 32540 14060 4 FIFO LIFO Weighted Average Specific Identification Sales (420*85)+(160*95) 50900 50900 50900 50900 Less: Cost of goods sold 31800 32920 32248 32540 Gross profit 19100 17980 18652 $18,360 .