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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...