Question

Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

Answer 1

Answer:

Warnerwoods Company

Perpetual Inventory System:

1. Cost of Goods Available for Sale and Units Available for Sale:

Mar. 1 Beginning inventory     60 units $50.20 per unit      $3,012

Mar. 5 Purchase                   205 units $55.20 per unit        11,316

Mar. 18 Purchase                    65 units $60.20 per unit        3,913

Mar. 25 Purchase                  110 units $62.20 per unit        6,842

Available for Sale                440 units            Cost =      $25,083

2. The number of units in ending inventory:

Units Available for Sale 440

Subtract units sold         310

Ending Inventory          130 units

3. The Cost assigned to ending inventory using:

a) FIFO: Ending Inventory

20 units at $60.20 per unit   = $1,204

110 units at $62.20 per unit  =  6,842

Ending Inventory                    $8,046

b) LIFO: Ending Inventory

Mar. 1 Beginning Inventory 45 units $50.20 per unit = $2,259

Mar. 18 Purchase 65 units $60.20 per unit  =                    3,913  

Mar. 25 Purchase 20 units $62.20 per unit   =                  1,244

Ending Inventory 130 units    Cost  = $7,416

c) Weighted Average: Ending Inventory

Cost of Goods Available for Sale divided by units available for sale

= $25,083/440 = $57 per unit

Ending Inventory = $57 x 130 = $7,410

d) Specific Identification: Ending Inventory

This cannot be answered from the  information provided in the question:

4. Gross Profit for each costing method:

                        FIFO             LIFO         WEIGHTED       SPECIFIC

                                                     AVERAGE        IDENTIFICATION

Sales               $27,312         $27,312         $27,312            $27,312

Cost of Sales    17,037           17,667            17,670

Gross Profit   $10,275          $9,645          $9,642

Explanation:

a) Sales:

Mar. 9 Sales 220 units $85.20 per unit = $18,744

Mar. 29 Sales 90 units $95.20 units   =       8,568

Total = $27,312

b) Cost of Sales:

i) FIFO

Mar 1. Beginning inventory 60 units $50.20 per unit  = $3,012

Mar. 5 Purchase 205 units $55.20 per unit      =            11,316

Mar. 18 Purchase 45 units $60.20                     =            2,709

Cost of Sales = $17,037

ii) LIFO:

Mar. 1 Beginning inventory 15 units $50.20 per unit  = $753

Mar. 5 Purchase 205 units $55.20 per unit   = $11,316

Mar. 25 Purchase 90 units $62.20 per unit   = $5,598

Cost of Sales = $17,667

iii) Weighted Average:

Cost of Sales = $57 x 310 = $17,670

c) Calculations under the specific identification cannot be made because of the figures given under this method.