1. Marlow Company uses a perpetual inventory system.

It entered into the following calendar-

year 2011 purchases and sales transactions.

a. Compute cost of goods available for sale and the number of units available for sale.

Cost of goods available for

sale
Date Quantity Unit Cost Total Cost
Jan 1 600 $44 $26,400
Feb 10 200 $40 $8,000
Mar 13 100 $20 $2,000
Aug 21 160 $60 $9,600
Sep 5 280 $48 $13,440
Totals 1340 $59,440
b. Compute the number of units in ending inventory.
Total units 1,340
less: units sold (600)
Ending inventory 740
c. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) specific
identification—units sold consist of 500 units from beginning inventory and 100 units from the
March 13 purchase, and (d) weighted average. (Round per unit costs to three decimals, but
inventory balances to the dollar.)
  FIFO

Cost of
Cost of
goods Inventory
Goods
available on Hand
Sold
for sale
Unit Total Unit Total Unit Total
Date Quantity Quantity Quantity
Cost Cost Cost Cost Cost Cost
Jan 1 600 $44 $26,400 600 $44 $26,400
Feb
200 $40 $8,000 600 $44 $26,400
10
200 $40 $8,000
Mar
100 $20 $2,000 600 $44 $26,400
13
200 $40 $8,000
100 $20 $2,000
Mar
400 $44 $17,600 200 $44 $8,800
15
200 $40 $8,000
100 $20 $2,000
Aug
160 $60 $9,600 200 $44 $8,800
21
200 $40 $8,000
100 $20 $2,000
160 $60 $9,600
Sep 5 280 $48 $13,440 200 $44 $8,800
200 $40 $8,000
100 $20 $2,000
160 $60 $9,600
280 $48 $13,440
Sep 200 $44 $8,800 200 $40 $8,000
10
100 $20 $2,000
160 $60 $9,600
280 $48 $13,440
Totals 1340 $59,440 600 $26,400 740 $33,040
 LIFO

Cost of
Cost of
goods Inventory
Goods
available on Hand
Sold
for sale
Unit Total Unit Total Unit Total
Date Quantity Quantity Quantity
Cost Cost Cost Cost Cost Cost
Jan 1 600 $44 $26,400 600 $44 $26,400
Feb
200 $40 $8,000 200 $40 $8,000
10
600 $44 $26,400
Mar
100 $20 $2,000 100 $20 $2,000
13
200 $40 $8,000
600 $44 $26,400
Mar
100 $20 $2,000
15
200 $40 $8,000
100 $44 $4,400 500 $44 $22,000
Aug
160 $60 $9,600 160 $60 $9,600
21
500 $44 $22,000
Sep 5 280 $48 $13,440 280 $48 $13,440
160 $60 $9,600
500 $44 $22,000
Sep 200 $48 $9,600 80 $48 $3,840
 10
160 $60 $9,600
500 $44 $22,000
Totals 1340 $59,440 600 $24,000 740 $35,440
 Specific identification
Cost of goods sold = (500 units * $44) + (100 units * $20)
= $24,000
Cost of ending inventory = cost of goods available for sale - the cost of goods sold
= $59,440 - $24,000 = $35,440
 Weighted average

Cost of
Cost of
goods Inventory
Goods
available on Hand
Sold
for sale
Unit Total Unit Total Unit Total
Date Quantity Quantity Quantity
Cost Cost Cost Cost Cost Cost
Jan 1 600 $44 $26,400 600 $44 $26,400
Feb
200 $40 $8,000 800 $43 $34,400
10
Mar
100 $20 $2,000 900 $40.444 $36,397
13
Mar
400 $40.444 $16,177 500 $40.444 $20,222
15
Aug
160 $60 $9,600 660 $45.185 $29,822
21
Sep 5 280 $48 $13,440 940 $46.023 $43,262
Sep
200 $46.023 $9,205 740 $46.023 $34,058
10
Totals 1340 $59,440 600 $25,382 740 $34,058
d. Compute gross profit earned by the company for each of the four costing methods in part 3.
Net sales revenue = (400 units * $75 per unit) + (200 units * $75 per unit) = $45,000
(a) FIFO: Net sales revenue - the cost of goods sold = $45,000 - $26,400 = $18,600
(b) LIFO: Net sales revenue - the cost of goods sold = $45,000 - $24,000 = $21,000
(c) Specific identification method: Net sales revenue - the cost of goods sold = $45,000 - $24,000
= $21,000
(d) Weighted average method: Net sales revenue - the cost of goods sold = $45,000 - $25,382 =
$19,618