1. Mastery Problem: Inventories

   Changing Prices

   You work for a CPA firm that has been hired by Widget Tek Inc., a merchandising company that is getting ready to expand. The president of Widget Tek Inc. is concerned with obtaining a loan for the expansion and wants to be sure that all the financial statements accurately reflect the companys accounting records.

   As preparation for this assignment, you have been asked to review the effects of changing prices on three inventory costing methods: A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.LIFO, The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.FIFO, and A method of inventory costing in which the cost of the units sold and in ending inventory is a weighted average of the purchase costs.weighted average.

   Inventory Records

   Widget Tek Inc.s original accountant accepted a position with another firm and left in early March. You have been asked to review the The subsidiary ledger containing individual accounts for items of inventory.subsidiary inventory ledger record for Widget Tek Inc.s main product for March.

   	Inventory
   Date	Quantity			Unit Cost			Total Cost
   Mar. 1		850			$98			$83,300
   		1,275			$95			$121,125
   Mar. 8		650			$98			$63,700
   Mar. 11		325			$98			$31,850
   Mar. 14		325			$98			$31,850
   		780			$103			$80,340
   Mar. 22		260			$98			$25,480
   Mar. 25		260			$98			$25,480
   		1,600			$101			$161,600

   Study the inventory record for March and answer the questions that follow.

   1. Assuming that the product sells for $170 and that 85% of sales are on account, determine the gross profit from sales for March. $

   2. Making the same assumptions as in (1), determine the ending inventory cost for March. $