Professional Documents
Culture Documents
Class: McGraw-Hill/Irwin
Problem 08-05
Date of Total
purchase Units Unit cost cost
Jan. 18 6,000 $ 10.00 $ 60,000
Jan. 10 2,000 9.00 18,000
Totals 8,000 $ 78,000
Correct! Correct!
FERRIS COMPANY
Merchandise transactions:
Purchases
Date of Purchase Units Unit Cost Total Cost
Jan. 10 5,000 $ 9.00 $ 45,000
Jan. 18 6,000 $ 10.00 60,000
Totals 11,000 $ 105,000
Sales
Date of Sale Units
Jan. 5 3,000
Jan. 12 2,000
Jan. 20 4,000
Total 9,000
Requirement 1:
TOPANGA GROUP
Inventory
a. FIFO
Cost of goods available for sale $ 159,000
Less: Ending inventory (calculation belo (70,000) «- Correct!
Cost of goods sold $ 89,000 «- Correct!
Date of Total
purchase Units Unit cost cost
March 22 14,000 $ 5.00 $ 70,000 «- Correct!
b. LIFO
Cost of goods available for sale $ 159,000
Less: Ending inventory (calculation below) (60,500) «- Correct!
Cost of goods sold $ 98,500 «- Correct!
Date of Total
purchase Units Unit cost cost
Jan. 7 5,000 $ 4.00 $ 20,000
Feb. 16 9,000 $ 4.50 40,500
Totals 14,000 $ 60,500
Correct! Correct!
c. Average cost
Cost of goods available for sale $ 159,000
Less: Ending inventory (calculation belo (65,471) «- Correct!
Cost of goods sold $ 93,529 «- Correct!
Requirement 2:
Gross Profit ratio:
Gross
Gross Profit
Profit Sales Ratio
In situations when costs are rising, LIFO results in a higher cost of goods sold and,
therefore, a lower gross profit ratio than FIFO.
Given Data P08-06:
TOPANGA GROUP
Merchandise transactions:
Purchases
Date of Purchase Units Unit Cost Total Cost
Jan. 7 5,000 $ 4.00 $20,000
Feb. 16 12,000 $ 4.50 54,000
March 22 17,000 $ 5.00 85,000
Totals 34,000 $159,000
Requirement 1:
Beginning inventory $ 183,000
Purchases: 211 $ 63,000
212 63,000
213 64,500
214 66,000
215 69,000
216 70,500
217 72,000
218 72,300
219 75,000 615,300
Cost of goods available $ 798,300 «- Correct!
Requirement 2:
Cost of goods available for sale $ 798,300
Less: Ending inventory (see below) (219,300) «- Correct!
Cost of goods sold $ 579,000 «- Correct!
Requirement 3:
Cost of goods available for sale $ 798,300
Less: Ending inventory (see below) (183,000) «- Correct!
Cost of goods sold $ 615,300 «- Correct!
Requirement 4:
Cost of goods available for sale $ 798,300
Less: Ending inventory (see below) (199,575) «- Correct!
Cost of goods sold $ 598,725 «- Correct!
HINT: Don't ignore the column headers on the spreadsheet. (Base year
costs do not usually equal year-end costs.
TAYLOR COMPANY
Inventory
TAYLOR COMPANY