The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B.
Instructions
1. Determine the inventory on June 30 and the cost of merchandise sold for the three-month period, using the first-in, first-out method and the periodic inventory system.
2. Determine the inventory on June 30 and the cost of merchandise sold for the three-month period, using the last-in, first-out method and the periodic inventory system.
3. Determine the inventory on June 30 and the cost of merchandise sold for the three-month period, using the weighted average cost method and the periodic inventory system. Round the weighted average unit cost to the dollar.
4. Compare the gross profit and June 30 inventories using the following column headings:
FIFO LIFO Weighted Average Sales Cost of merchandise sold Gross profit Inventory, June 30
Answer:
1. First-In, First-Out Method
Merchandise inventory, June 30................................................. $ 32,864
Cost of merchandise sold........................................................... 310,776
Supporting computations
Merchandise inventory:
26 units @ $1,264............................................................... $ 32,864
Cost of merchandise sold:
Beginning inventory, April 1....................................................... $ 30,000
Purchases............................................................................... 313,640
Merchandise available for sale.................................................... $343,640
Less ending inventory, June 30................................................... 32,864
Cost of merchandise sold......................................................... $310,776
2. Last-In, First-Out Method
Merchandise inventory, June 30................................................ $ 31,240
Cost of merchandise sold.......................................................... 312,400
Supporting computations
Merchandise inventory:
25 units @ $1,200............................................................... $30,000
1 unit @ $1,240............................................................... 1,240
26 units........................................................................... $31,240
Cost of merchandise sold:
Beginning inventory, April 1...................................................... $ 30,000
Purchases................................................................................. 313,640
Merchandise available for sale................................................... $343,640
Less ending inventory, June 30................................................. 31,240
Cost of merchandise sold.........................................................
3. Weighted Average Cost Method
Merchandise inventory, June 30.................................... $ 32,500
Cost of merchandise sold............................................. 311,140
Supporting computations
$343,640
275 units
Merchandise inventory:
26 units × $1,250 = $32,500
Cost of merchandise sold:
Beginning inventory, April 1....................................... $ 30,000
Purchases.................................................................. 313,640
Merchandise available for sale.................................... $343,640
Less ending inventory, June 30.................................... 32,500
Cost of merchandise sold............................................. $311,140
$312,400
4.Weighted
FIFO LIFO Average
Sales$525,250 $525,250 $525,250
Cost of merchandise sold 310,776 312,400 311,140
Gross profit $214,474 $212,850 $214,110
Inventory, June 30 $ 32,864 $ 31,240 $ 32,500