The beginning inventory for RTE Office Supplies and data on purchases and sales for a three-month period

The beginning inventory for RTE Office Supplies and data on purchases and sales for a three-month period are shown in Problem 7-1A.

Instructions

1. Determine the inventory on August 31, 2014, and the cost of goods sold for the threemonth
period, using the first-in, first-out method and the periodic inventory system.

2. Determine the inventory on August 31, 2014, and the cost of goods sold for the threemonth
period, using the last-in, first-out method and the periodic inventory system.

3. Determine the inventory on August 31, 2014, and the cost of goods sold for the threemonth
period, using the weighted average cost method and the periodic inventory
system. Round the weighted average unit cost to the nearest cent.

4. Compare the gross profit and the August 31, 2014, inventories, using the following column headings:


FIFO LIFO Weighted Average
Sales
Cost of merchandise sold
Gross profit
Inventory, August 31, 2014




Answer:





3. Weighted Average Cost Method
Merchandise inventory, August 31, 2014………………… $ 26,160
Cost of merchandise sold…………………………………… 291,240
Supporting computations
Weighted Average Unit Cost = Total Cost of Merchandise Available for Sale
Units Available for Sale
= $317,400
9,100 units = $34.88 per unit (rounded)
Merchandise inventory:
750 units × $34.88 = $26,160
Cost of merchandise sold:
Beginning inventory, June 1, 2014………………………… $ 15,000

Purchases……………………………………………………… 302,400
Merchandise available for sale……………………………… $317,400
Less ending inventory, August 31, 2014…………………… 26,160
Cost of merchandise sold…………………………………… $291,240





4. Weighted
FIFO LIFO Average
Sales $483,800 $483,800 $483,800
Cost of merchandise sold 290,450 293,900 291,240
Gross profit $193,350 $189,900 $192,560


1. First-In, First-Out Method
Merchandise inventory, August 31, 2014………………………………… $ 26,950
Cost of merchandise sold…………………………………………………… 290,450
Supporting computations
Merchandise inventory:
500 units @ $36.00 $18,000
250 units @ $35.80 8,950
750 units $26,950
Cost of merchandise sold:
Beginning inventory, June 1, 2014………………………………………… $ 15,000
Purchases………………………………………………………………….. 302,400
Merchandise available for sale…………………………………………. $317,400
Less ending inventory, August 31, 2014…………………………………… 26,950
Cost of merchandise sold………………………………………………… $290,450
2. Last-In, First-Out Method
Merchandise inventory, August 31, 2014………………………………… $ 23,500
Cost of merchandise sold…………………………………………………… 293,900
Supporting computations
Merchandise inventory:
500 units @ $30.00……………………………………………………… $15,000
250 units @ $34.00……………………………………………………… 8,500
750 units…………………………………………………………………… $23,500
Cost of merchandise sold:
Beginning inventory, June 1, 2014………………………………………… $ 15,000
Purchases………………………………………………………………….. 302,400
Merchandise available for sale…………………………………………. $317,400
Less ending inventory, August 31, 2014…………………………………… 23,500
Cost of merchandise sold………………………………………………… $293,900

Inventory, August 31, 2014 $ 26,950 $ 23,500 $ 26,160