Answer:
Dunne Co.
1. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the first-in, first-out method and the periodic inventory system:
a) Inventory, June 30 = $32,864 (26 x $1,264)
b) Cost of goods sold = Cost of goods available for sale - Ending Inventory = $310,776 ($343,640 - $32,864)
2. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the last-in, first-out method and the periodic inventory system:
a) Inventory, June 30 = $
Beginning Inventory 25 units at $1,200 = $30,000
Purchase on April 8, 1 unit at $1,240 1,240
Total Ending Inventory $31,240
b)Cost of goods sold = Cost of goods available for sale - Ending Inventory
= $311,400 ($343,640 - $32,240)
3. Determine the inventory on June 30 and the cost of goods sold for the three-month period, using the weighted average cost method and the periodic inventory system. Note: Round the weighted average unit cost to the nearest dollar and final answers to the nearest dollar:
a) Inventory, June 30 = $32,489.60 (26 x $1,249.60)
b) Cost of goods sold = $311,150.40 (249 x $1,249.60)
4. Compare the gross profit and June 30 inventories using the following column headings. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
FIFO LIFO Weighted Average
Sales $525,250 $525,250 $525,250
Cost of goods sold 310,776 311,400 311,150
Gross profit $214,474 $213,850 $214,100
Inventory, June 30 $32,864 $31,240 $32,489.60
Explanation:
a) Purchases and Sales Data:
Date Transaction Number of Units Per Unit Total
In Out Cost Sales
Apr. 3 Inventory 25 $1,200 $30,000
8 Purchase 75 1,240 93,000
11 Sale 40 2,000 80,000
30 Sale 30 2,000 60,000
May 8 Purchase 60 1,260 75,600
10 Sale 50 2,000 100,000
19 Sale 20 2,000 40,000
28 Purchase 80 1,260 100,800
June 5 Sale 40 2,250 90,000
16 Sale 25 2,250 56,250
21 Purchase 35 1,264 44,240
28 Sale 44 2,250 99,000
b) Goods Available 275 $343,640
Cost of goods sold 249 $525,250
Ending Inventory 26
c) Average cost of goods = Cost of goods available for sale/Quantity of goods available for sale = $343,640/275 = $1,249.60
d) FIFO, LIFO, and Weighted Average Costing Method under the periodic inventory system assume that 1) FIFO, the goods bought first are sold first; 2) LIFO, the goods bought last are sold first; and 3) Weighted Average, the cost of goods is the weighted average, and lastly that it is only when physical count is taken of inventory that one can estimate its value. Unlike the perpetual inventory system, the periodic must wait till the end of a financial period to value stock. The results for ending inventory under the weighted average method, using the perpetual inventory system differs from the results under the same method, using the periodic inventory system.
