Periodic Inventory by Three Methods

The beginning inventory for Dunne Co$.$ and data on purchases and sales for a three$-$month period are as follows:

Date Transaction Number

of Units Per Unit Total

Apr. $3$ Inventory $25$ $$1,200$ $$30,000$

$8$ Purchase $751,24093,000$

$11$ Sale $402,00080,000$

$30$ Sale $302,00060,000$

May $8$ Purchase $601,26075,600$

$10$ Sale $502,000100,000$

$19$ Sale $202,00040,000$

$28$ Purchase $801,260100,800$

June $5$ Sale $402,25090,000$

$16$ Sale $252,25056,250$

$21$ Purchase $351,26444,240$

$28$ Sale $442,25099,000$

Required:

$1.$ Determine the inventory on June $30$ and the cost of goods sold for the three$-$month period, using the first$-$in$,$ first$-$out method and the periodic inventory system.

Inventory, June $30$ $fill in the blank $1$

$32,864$

Cost of goods sold $fill in the blank $2$

$2.$ Determine the inventory on June $30$ and the cost of goods sold for the three$-$month period, using the last$-$in$,$ first$-$out method and the periodic inventory system.

Inventory, June $30$ $fill in the blank $3$

$31,240$

Cost of goods sold $fill in the blank $4$

$3.$ Determine the inventory on June $30$ and the cost of goods sold for the three$-$month period, using the weighted average cost method and the periodic inventory system.

Note: Round the weighted average unit cost to the nearest dollar and final answers to the nearest dollar.

Inventory, June $30$ $fill in the blank $5$

$32,500$

Cost of goods sold $fill in the blank $6$

$4.$ Compare the gross profit and June $30$ inventories using the following column headings. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

FIFO LIFO Weighted Average

Sales $fill in the blank $7$

$525,250$

$fill in the blank $8$

$525,250$

$fill in the blank $9$

$525,250$

Cost of goods sold fill in the blank $10$

fill in the blank $11$

fill in the blank $12$

Gross profit $fill in the blank $13$

$214,474$

$fill in the blank $14$

$212,850$

$fill in the blank $15$

Inventory, June $30$ $fill in the blank $16$

$32,864$

$fill in the blank $17$

$31,240$

$fill in the blank $18$

$32,500$

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$1.$ Note that the periodic inventory system is used in this problem. FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, ending inventory costs for the period are calculated by taking the number of items remaining in the physical inventory times the most recent purchase price. If the number of items in last purchase layer is less than the number in ending inventory, the balance of the ending inventory items must be recorded at the second most recent purchase cost. The cost of goods sold for the period can be calculated by subtracting the ending inventory from the total cost of goods available for sale.

$2.$ Note that the periodic inventory system is used in this problem. LIFO means the last units purchased are assumed to be the first to be sold. Therefore the ending inventory for the period is made up of the earliest costs from the period $($the beginning inventory$).$ If the number of units in the ending inventory is greater than the units in the beginning inventory, the excess units will be recorded at the next oldest cost associated with the first purchase. The cost of goods sold for the period can be calculated by subtracting the ending inventory from the total cost of goods available for sale.

$3.$ Note that the periodic inventory system is used in this problem. The weighted average cost means the average cost of all available units purchased is applied to the number of units sold and those in ending inventory. Therefore, you must first obtain a unit cost by dividing the total cost of all units available for sale by the number of units available for sale. Then multiply the number of items remaining in the physical inventory times this unit cost. The cost of goods sold for the period can be calculated by subtracting the ending inventory from the total cost of goods available for sale.

$4.$ Recall that FIFO reports higher gross profit, net income, and inventory than the LIFO method when costs $($prices$)$ are increasing. The weighted average reports gross profit, net income, and inventory between that of FIFO and LIFO.

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