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    The document is a student's homework assignment calculating inventory costs and gross profit using FIFO, LIFO, and weighted average costing methods. It provides the transactions for a tire store in chronological order. The student computes the costs of goods sold and ending inventory for each method. FIFO results in the highest gross profit of $759 because during periods of increasing inventory costs, it yields the lowest cost of goods sold.

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    The document is a student's homework assignment calculating inventory costs and gross profit using FIFO, LIFO, and weighted average costing methods. It provides the transactions for a tire store in chronological order. The student computes the costs of goods sold and ending inventory for each method. FIFO results in the highest gross profit of $759 because during periods of increasing inventory costs, it yields the lowest cost of goods sold.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    2K views3 pages

    Be104 Homework 3-Lara Pacheco

    Uploaded by

    api-331018879
    The document is a student's homework assignment calculating inventory costs and gross profit using FIFO, LIFO, and weighted average costing methods. It provides the transactions for a tire store in chronological order. The student computes the costs of goods sold and ending inventory for each method. FIFO results in the highest gross profit of $759 because during periods of increasing inventory costs, it yields the lowest cost of goods sold.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    12/17/2016

    BE104Homework#3LaraPacheco

    Instructor:InternationalCollegeCayman
    Islands
    Assignment:BE104Homework#3
    Course:BE104Fall2016

    Student:LaraPacheco
    Date:12/17/16

    3. AssumethatRKTireStorecompletedthefollowingperpetualinventorytransactionsforalineoftires:
    1
    (Clicktheicontoviewthetransactions.)
    Readtherequirements.2
    ReviewOnly

    ClicktheicontoseetheWorkedSolution.
    Requirement1.ComputecostofgoodssoldandgrossprofitusingtheFIFOinventorycostingmethod.
    BeginbycomputingthecostofgoodssoldandcostofendingmerchandiseinventoryusingtheFIFOinventorycosting
    method.Enterthetransactionsinchronologicalorder,calculatingnewinventoryonhandbalancesaftereachtransaction.
    Onceallofthetransactionshavebeenenteredintotheperpetualrecord,calculatethequantityandtotalcostof
    merchandiseinventorypurchased,sold,andonhandattheendoftheperiod.(Entertheoldestinventorylayersfirst.)
    Purchases

    CostofGoodsSold

    InventoryonHand

    Unit

    Total

    Unit

    Total

    Unit

    Total

    Date

    Quantity

    Cost

    Cost

    Quantity

    Cost

    Cost

    Quantity

    Cost

    Cost

    May1

    11

    6 $

    23

    26

    29

    76 $

    456

    24 $

    61 $

    1,464

    24 $

    61 $

    1,464

    6 $

    76 $

    456

    976

    8 $

    61 $

    488

    16 $

    61 $

    6 $

    76 $

    456

    14 $

    86 $

    1,204

    8 $

    61 $

    488

    6 $

    76 $

    456

    14 $

    86 $

    1,204

    11 $

    86 $

    946

    8 $

    61 $

    488

    6 $

    76 $

    456

    3 $

    86 $

    258

    Totals

    20

    1,660

    33

    2,178

    11

    946

    ComputegrossprofitusingtheFIFOinventorycostingmethod.
    Grossprofitis$

    759 usingtheFIFOinventorycostingmethod.

    Requirement2.ComputecostofgoodssoldandgrossprofitusingtheLIFOinventorycostingmethod.
    BeginbycomputingthecostofgoodssoldandcostofendingmerchandiseinventoryusingtheLIFOinventorycosting
    method.Enterthetransactionsinchronologicalorder,calculatingnewinventoryonhandbalancesaftereachtransaction.
    Onceallofthetransactionshavebeenenteredintotheperpetualrecord,calculatethequantityandtotalcostof
    merchandiseinventorypurchased,sold,andonhandattheendoftheperiod.(Entertheoldestinventorylayersfirst.)

    https://xlitemprod.pearsoncmg.com/api/v1/print/accounting

    1/3

    12/17/2016

    BE104Homework#3LaraPacheco

    Purchases

    CostofGoodsSold

    InventoryonHand

    Unit

    Total

    Unit

    Total

    Unit

    Total

    Date

    Quantity

    Cost

    Cost

    Quantity

    Cost

    Cost

    Quantity

    Cost

    Cost

    May1

    11

    6 $

    24 $

    61 $

    1,464

    24 $

    61 $

    1,464

    6 $

    76 $

    456
    854

    6 $

    76 $

    456

    14 $

    61 $

    10 $

    61 $

    610

    14 $

    86 $

    14 $

    61 $

    854

    14 $

    86 $

    1,204

    11 $

    61 $

    671

    29

    1,204

    Totals

    456

    26

    76 $

    23

    1,660

    14 $

    86 $

    3 $

    61 $

    20

    1,204
    183

    33

    2,453

    11

    671

    ComputegrossprofitusingtheLIFOinventorycostingmethod.
    Grossprofitis$

    484 usingtheLIFOinventorycostingmethod.

    Requirement3.Computecostofgoodssoldandgrossprofitusingtheweightedaverageinventorycostingmethod.
    (Roundweightedaveragecostperunittothenearestcentandallotheramountstothenearestdollar.)
    Beginbycomputingthecostofgoodssoldandcostofendingmerchandiseinventoryusingtheweightedaverage
    inventorycostingmethod.Enterthetransactionsinchronologicalorder,calculatingnewinventoryonhandbalancesafter
    eachtransaction.Onceallofthetransactionshavebeenenteredintotheperpetualrecord,calculatethequantityandtotal
    costofmerchandiseinventorypurchased,sold,andonhandattheendoftheperiod.
    Purchases

    CostofGoodsSold

    InventoryonHand

    Unit

    Total

    Unit

    Total

    Unit

    Total

    Date

    Quantity

    Cost

    Cost

    Quantity

    Cost

    Cost

    Quantity

    Cost

    Cost

    May1
    11

    6 $

    76 $

    23

    26

    14 $

    86 $

    29

    Totals

    20

    456

    1,660

    24 $

    61 $

    1,464

    30 $

    64 $

    1,920

    1,024

    14 $

    64 $

    896

    28 $

    75 $

    2,100

    75 $

    825

    825

    16 $

    64 $

    17 $

    75 $

    1,275

    11 $

    2,299

    11

    1,204

    33

    Computegrossprofitusingtheweightedaverageinventorycostingmethod.
    Grossprofitis$

    638 usingtheweightedaverageinventorycostingmethod.

    Requirement4.Whichmethodresultsinthelargestgrossprofit,andwhy?
    The FIFO

    methodresultsinthelargestgrossprofitbecauseduringtimesof increasing inventoryprices,

    thismethodwillproducethe lowest costofgoodssold.

    1:MoreInfo
    https://xlitemprod.pearsoncmg.com/api/v1/print/accounting

    2/3

    12/17/2016

    BE104Homework#3LaraPacheco

    May1 Beginningmerchandiseinventory

    24 tires@ $

    61 each

    6 tires@ $

    76 each

    23 Sale

    16 tires@ $

    89 each

    26 Purchase

    14 tires@ $

    86 each

    29 Sale

    17 tires@ $

    89 each

    11 Purchase

    2:Requirements
    1.

    ComputecostofgoodssoldandgrossprofitusingtheFIFOinventorycostingmethod.

    2.

    ComputecostofgoodssoldandgrossprofitusingtheLIFOinventorycostingmethod.

    3.

    Computecostofgoodssoldandgrossprofitusingtheweightedaverageinventorycostingmethod.(Round
    weightedaveragecostperunittothenearestcentandallotheramountstothenearestdollar.)

    4.

    Whichmethodresultsinthelargestgrossprofit,andwhy?

    https://xlitemprod.pearsoncmg.com/api/v1/print/accounting

    3/3

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