# Some of the information found on a detailed inventory card for Soave Stationery Ltd. for May is as follows: Instructions (a) From the above data, calculate the ending inventory perpetual inventory records are kept in units only and unit costs to the nearest cent and ending inventory to 1. First-in, first-out (FIFO) 2. Weighted average cost based on each of

Instructions

(a) From the above data, calculate the ending inventory perpetual inventory records are kept in units only and unit costs to the nearest cent and ending inventory to

1. First-in, first-out (FIFO)

2. Weighted average cost based on each of the following cost formulas. Assume that average cost is calculated monthly at each month end. Carry the nearest dollar.

(b) Based on your results in part (a), and assuming that the average selling price per unit during May was $7.25, pre- pare partial income statements up to the "gross profit on sales" line. Calculate the gross profit percentage under each inventory cost formula. Comment on your results.

(c) Assume the perpetual inventory record is kept in dollars, and costs are calculated at the time of each withdrawal. Recalculate the amounts under this revised assumption, carrying average unit costs to four decimal places. Would the ending inventory amounts under each of the two cost formulas above be the same? Explain.

The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...

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**Related Book For**

## Intermediate Accounting

11th Canadian edition Volume 1

**Authors:** Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy

**ISBN:** 978-1119048534