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# Quick Study 6-1

FIFO
Date

Goods Purchased

1/ 1
1/ 9

85 @ \$6.40

1/25

110 @ \$6.60

1/26

Cost of Goods Sold

320 @ \$6.00 = \$1,920
40 @ \$6.40 =
256
360
\$2,176

Alternate solution format
FIFO:
110 @ \$6.60 =
45 @ \$6.40 =
155

\$ 726
288
\$1,014

Inventory Balance

320 @ \$6.00
320 @ \$6.00
85 @ \$6.40
320 @ \$6.00
85 @ \$6.40
110 @ \$6.60
45 @ \$6.40
110 @ \$6.60

= \$1,920
= \$2,464
= \$3,190
= \$1,014

Ending inventory cost

Quick Study 6-2
LIFO
Date

Goods Purchased

1/ 1
1/ 9

85 @ \$6.40

1/25

110 @ \$6.60

1/26

Cost of Goods Sold

110 @ \$6.60 = \$ 726
85 @ \$6.40 =
544
165 @ \$6.00 =
990
360
\$2,260

Alternate solution format
LIFO:
155 @ \$6.00 =

\$ 930

Inventory Balance

320 @ \$6.00
320 @ \$6.00
85 @ \$6.40
320 @ \$6.00
85 @ \$6.40
110 @ \$6.60
155 @ \$6.00

= \$1,920
= \$2,464
= \$3,190
= \$ 930

Ending inventory cost

Quick Study 6-3
Weighted Average
Date

1/ 1
1/ 9

Goods Purchased

85 @ \$6.40

Cost of Goods Sold

Inventory Balance

320 @ \$6.00
320 @ \$6.00
85 @ \$6.40

= \$1,920
= \$2,464

350 10 @ \$10 = \$ 1.60 = \$3.194*) 360 @ \$6.050 400 @ \$20 = \$ 8.230* 1/26 155 @ \$6.000 _____ \$8. cost is \$6.190 (avg.194 = \$2.800 220 @ \$20 = \$ 4.000 10/5 10/26 Inventory Balance 120 @ \$15 180 @ \$20 = \$5.00 = 85 @ \$6.60 = 515 \$1.084*) 1/25 110 @ \$6.40 = 110 @ \$6.(avg.194 = \$ 960* *rounded Alternate solution format Weighted average: 320 @ \$6. LIFO Perpetual Date Goods Purchased Cost of Goods Sold 100 Inventory Balance .920 544 726 \$3. cost is \$6. FIFO Perpetual Date Goods Purchased Cost of Goods Sold 1/1 100 @ \$10 1/10 3/14 90 @ \$10 = \$ 900 250 @ \$15 = \$ 3.194 (rounded) weighted average cost per unit 155 units @ \$6.000 =\$ 10 @ \$10 250 @ \$15 = \$ 3.40 110 @ \$6.750 3/15 7/30 10 @ \$10 130 @ \$15 = \$2.400 600 @ \$25 = \$15.190 Cost of goods available for sale \$3.850 120 @ \$15 = \$ 1.400 220 @ \$20 600 @ \$25 = \$19.60 320 @ \$6.190/515 = \$6.194 = \$ 960 Ending inventory cost (rounded) Exercise 6-5 a.800 120 @ \$15 400 @ \$20 = \$ 9.400 b.00 85 @ \$6.

....... Gross margin ................... Less: FIFO cost of goods sold ............750 \$9..................000 10/26 600 @ \$25 = \$15.......................................................750 10 @ \$10 110 @ \$15 100 @ \$20 = \$ 3..000 10 @ \$10 = \$ 1.......200 9.................... LIFO: (10 x \$10) + (110 x \$15) + (100 x \$20) + (600 x \$25) ..... \$21...........................200 .......000 \$12.....350 \$18.....850 10 @ \$10 110 @ \$15 = \$ 1.....1/1 100 @ \$10 1/10 3/14 90 @ \$10 = \$ 900 250 @ \$15 = \$ 3............... (90 x \$10) + (140 x \$15) + (300 x \$20) ..........850 LIFO Gross Margin Sales Revenue (530 units sold x \$40 selling price) .....750 Alternate Solution Format Ending Inventory a..........350 \$12........ Cost of Goods Sold \$19......750 10 @ \$10 110 @ \$15 100 @ \$20 600 @ \$25 = \$ 18..................... Less: LIFO cost of goods sold ........000 FIFO Gross Margin Sales Revenue (530 units sold x \$40 selling price) ........ b........750 3/15 140 @ \$15 = \$2..........................100 7/30 400 @ \$20 = \$ 8.............200 8.. Gross margin .............................. FIFO: (600 x \$25) + (220 x \$20) .......750 10 @ \$10 110 @ \$15 400 @ \$20 = \$ 9......... \$21..000 _____ \$9.000 10/5 300 @ \$20 = \$6...... (90 x \$10) + (10 x \$10) + (130 x \$15) + (120 x \$15)+ (180 x \$20) ..........000 = \$ 100 10 @ \$10 250 @ \$15 = \$ 3............................400 \$8......................

........... Cost of goods available for sale .............295 2...355 \$103............ 5 ...Exercise 6-6 a....... Jan...............850 b................. 2.... Specific identification method—Cost of goods sold Cost of goods available for sale ....200 8.. July 21....................850 \$12..000 Total ending inventory under specific identification ..................825 Less: Units sold (given) .......750 18.. 13 .............................. \$ 1...................350 Problem 6-2B 1...... Units available ..... 1................... Less: Specific identification cost of goods sold ...........................060 ....................... Cost of goods sold under specific identification ............................. 600 units @ \$55 = \$ 33........900 \$ 8......... Units in ending inventory: Units available (from part 1) ..........000 450 units @ \$56 = 200 units @ \$57 = 230 units @ \$58 = 25.....................825 units 20.. 345 units @ \$59 = 1.. 765 Ending Inventory .500 7/30 purchase (120 @ \$20) ..... 10..........340 Aug........................................................ 15.................400 13............ 1......... Feb.200 11...... \$21..................... Ending inventory under specific identification 3/14 purchase (100 @ \$15) ........400 10/26 purchase (600 @ \$25) .. Calculate cost of goods available for sale and units available for sale: Beginning inventory ....................... \$27................... Specific identification method—Gross margin Sales Revenue (530 units sold x \$40 selling price) ............. Gross margin.................

....... 765 Total cost of goods sold ............. 165 @ 56 .......350 9...055 .290 = \$79......... Less: Cost of Goods Sold 430 @ \$55 . 285 @ \$56 200 @ \$57 230 @ \$58 345 @ \$59 \$103..000 = \$58...590 ______ \$42........................ 170 @ 55 ............950 2/15 7/21 8/5 430 @ \$55 = \$23.. FIFO perpetual Date Goods Purchased Cost of Goods Sold 1/1 Inventory Balance 600 @ \$55 = \$33..........055 = \$59.600 170 @ \$55 450 @ \$56 200 @ \$57 = \$45...240 \$ 61............200 1/10 450 @ \$56 = \$25....400 13....Problem 6-2B (Continued) 3a.... Ending Inventory ....355 \$ 61...295 \$23...................960 11........240 42....400 600 @ \$55 450 @ \$56 200 @ \$57 = \$69........340 170 @ \$55 450 @ \$56 200 @ \$57 230 @ \$58 345 @ \$59 = \$20.......340 20.....060 units \$ 15..........055 Proof of Ending Inventory Ending Inventory…… 285 @ \$56 200 @ 57 230 @ 58 345 @ 59 1............240 Alternate FIFO solution format Cost of goods available for sale ..355 8/10 170 @ \$55 450 @ \$56 200 @ \$57 230 @ \$58 345 @ \$59 170 @ \$55 165 @ \$56 = \$18...645 = \$61.......200 600 @ \$55 450 @ \$56 2/13 200 @ \$57 = \$11............................650 230 @ \$58 = \$13.........650 9....

...280 230 @ \$58 = \$13...................045 \$ 59......250 = \$79..... 765 Cost of Goods Sold ..340 345 @ \$59 = \$20.Problem 6-2B (Continued) 3b...............320 13.000 12...........660 600 @ \$55 220 @ \$56 230 @ \$58 345 @ \$59 335 @ \$59 = \$19..........250 Proof of Ending Inventory Ending inventory ................... 335 @ 59 ..........000 600 @ \$55 450 @ \$56 = \$58..355 8/10 Inventory Balance 600 @ \$55 = \$33.... Ending Inventory ........765 ______ \$44.........200 200 @ \$57 = \$11.600 600 @ \$55 220 @ \$56 = \$45..... LIFO perpetual Date Goods Purchased Cost of Goods Sold 1/1 1/10 2/13 450 @ \$56 = \$25.........................060 units \$ 33.340 590 \$ 59..............400 12.765 44......250 ...........015 = \$59..........200 600 @ \$55 450 @ \$56 200 @ \$57 = \$69.............880 19............... Less: Cost of Goods Sold 200 @ \$57 ........ 600 @ \$55 220 @ 56 230 @ 58 10 @ 59 1......295 \$11..... 230 @ 56 ......320 600 @ \$55 220 @ \$56 230 @ \$58 = \$58..........400 2/15 7/21 8/5 200 @ \$57 230 @ \$56 = \$24.........045 Alternate LIFO solution format Cost of goods available for sale ... 600 @ \$55 220 @ \$56 230 @ \$58 10 @ \$59 \$103..

...88*) 8/10 335@ \$56.000 9.....000 600 @ \$55.405 \$ 60. 165 @ \$57 ..00 450 @ \$56...200 (avg...355 820 @ \$55. The \$5 difference from the cost of goods available for sale of \$103... Cost of Goods Sold ..... 765 ...290.00 450 @ \$56 = \$25.405 42......600 (avg.....400 600 @ \$55......293** * rounded to nearest cent ** rounded to nearest dollar Note: Total cost of goods sold plus ending inventory = \$42.......43*) 2/13 200 @ \$57 = \$11.68 = \$45..060@ \$56..... Ending inventory .......942** 230 @ \$58 = \$13..68) 2/15 7/21 430@ \$55..060 Units \$25. Specific Identification Cost of goods available for sale .00 = \$79......995 13. \$103..997 1. 1...353** (avg..340 820 @ \$55..295 \$33......890 3d. cost is \$56....88 = \$60..... cost is \$56..00 450 @ \$56.......19*) 8/5 345 @ \$59 = \$20...............68 = \$23...340 20..658** 820 @ \$55.00 345 @ \$59.........68 230 @ \$58. cost is \$55.997 + \$60...00 = \$58...Problem 6-2B (Continued) 3c.. Less: Cost of Goods Sold 600 @ \$55 .....200 = \$33......200 1..68 230 @ \$58...........00 200 @ \$57...293 = \$103................998** (avg...... Weighted Average Date Goods Purchased Cost of Goods Sold 1/1 1/10 Inventory Balance 600 @ \$55.355 \$60...055** \$42....00 = \$69.890 Proof of Ending Inventory 450 @ \$56 35 @ 57 230 @ 58 345 @ 59 Ending inventory .00 = \$58.295 is due to rounding..88 = \$19. cost is \$55. ...

........ The manager of Venus Company likely will prefer the FIFO method because it would yield the largest gross profit.. LIFO \$68.....405 42....805 \$26...853 FIFO Sales (765 x \$90) ..850 44..850 \$68....610 \$24.997 \$26.850 \$68.. Specific Identification Weighted Average \$68..240 5. Gross profit ..445 \$25............045 42.850 42. .Problem 6-2B (Concluded) 4.... Less: Cost of goods sold ......... This would give the manager his/her highest bonus based on gross profit...