The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B.

Instructions

1. Determine the inventory on June 30, 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 June 30, 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 June 30, 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 dollar.

4. Compare the gross profit and June 30, 2014, inventories using the following column headings:










FIFO LIFO Weighted Average
Sales
Cost of merchandise sold
Gross profit
Inventory, June 30, 2014


Answer:

1. First-In, First-Out Method
Merchandise inventory, June 30, 2014…………………………………… $ 32,864
Cost of merchandise sold………………………………………..…………… 310,776
Supporting computations
Merchandise inventory:
26 units @ $1,264……………………………………………...……… $ 32,864
Cost of merchandise sold:
Beginning inventory, April 1, 2014………………………………………… $ 30,000
Purchases……………………………………………………………….……… 313,640
Merchandise available for sale……………………………………….…… $343,640
Less ending inventory, June 30, 2014…………………………………… 32,864
Cost of merchandise sold………………………………………………….. $310,776
2. Last-In, First-Out Method
Merchandise inventory, June 30, 2014…………………………………… $ 31,240
Cost of merchandise sold…………………………………….…………… 312,400
Supporting computations
Merchandise inventory:
25 units @ $1,200………………………………………………………… $30,000
1 unit @ $1,240………………………………………………………… 1,240
26 units…………………………………………………………………… $31,240
Cost of merchandise sold:
Beginning inventory, April 1, 2014………………………………………… $ 30,000
Purchases…………………………………………………………………...… 313,640
Merchandise available for sale…………………………………………… $343,640
Less ending inventory, June 30, 2014…………………………………… 31,240
Cost of merchandise sold…………………………………………………… $312,400



3. Weighted Average Cost Method
Merchandise inventory, June 30, 2014……………………… $ 32,500
Cost of merchandise sold…………………………………… 311,140
Supporting computations
Weighted Average Unit Cost = Total Cost of Merchandise Available for Sale
Units Available for Sale
= $343,640
275 units = $1,250 per unit (rounded)
Merchandise inventory:
26 units × $1,250 = $32,500
Cost of merchandise sold:
Beginning inventory, April 1, 2014…………………………. $ 30,000
Purchases………………………………………………………… 313,640
Merchandise available for sale……………………………… $343,640
Less ending inventory, June 30, 2014……………………… 32,500
Cost of merchandise sold……………………………………… $311,140




4. Weighted
FIFO LIFO Average
Sales $525,250 $525,250 $525,250
Cost of merchandise sold 310,776 312,400 311,140
Gross profit $214,474 $212,850 $214,110
Inventory, June 30, 2014 $ 32,864 $ 31,240 $ 32,500

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown

The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are shown in Problem 7-1B.

Instructions

1. Record the inventory, purchases, and cost of merchandise sold data in a perpetual inventory record similar to the one illustrated in Exhibit 5, using the weighted average cost method.

2. Determine the total sales, the total cost of merchandise sold, and the gross profit from sales for the period.

3. Determine the ending inventory cost on June 30, 2014.


Answer:

Purchases Cost of Merchandise Sold Inventory
Quantity
Unit
Cost
Total
Cost Quantity Unit Cost
Total
Cost Quantity Unit Cost
Total
Cost
Apr. 3 25 1,200 30,000
8 75 1,240 93,000 100 1,230 123,000
11 40 1,230 49,200 60 1,230 73,800
30 30 1,230 36,900 30 1,230 36,900
May 8 60 1,260 75,600 90 1,250 112,500
10 50 1,250 62,500 40 1,250 50,000
19 20 1,250 25,000 20 1,250 25,000
28 80 1,260 100,800 100 1,258 125,800
June 5 40 1,258 50,320 60 1,258 75,480
16 25 1,258 31,450 35 1,258 44,030
21 35 1,264 44,240 70 1,261 88,270
28 44 1,261 55,484 26 1,261 32,786
30 Balances 310,854 32,786
1


2. Total sales…………………………………………………………… $525,250 *
Total cost of merchandise sold………………………………… 310,854
Gross profit………………………………………………………… $214,396
*$525,250 = $80,000 + $60,000 + $100,000 + $40,000 + $90,000 + $56,250 + $99,000

3. $32,786 (26 units × $1,261)