Calculate cost of goods sold and ending inventory under LIFO, FIFO, and moving-average cost under the perpetual system; compare gross profit under each assumption. a. (iii) Gross profit: LIFO FIFO Average $2,160 $2,560 $2,421 *P6.8 (LO 5), AP Dempsey Inc. is a retailer operating in British Columbia. Dempsey uses the per- petual inventory system. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Dempsey Inc. for the month of January 2022. Date January 1 January 5 January 8 January 10 January 15 January 16 January 20 January 25 Description Beginning inventory Purchase Sale Sale return Purchase Purchase return Sale Purchase Quantity 100 140 110 10 55 5 90 20 Unit Cost or Selling Price $15 18 28 28 20 20 32 22 Instructions a. For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. 1. LIFO. 2. FIFO. 3. Moving-average cost. (Round the weighted-average unit cost to three decimal places.) b. Compare results for the three cost flow assumptions.
Calculate cost of goods sold and ending inventory under LIFO, FIFO, and moving-average cost under the perpetual system; compare gross profit under each assumption. a. (iii) Gross profit: LIFO FIFO Average $2,160 $2,560 $2,421 *P6.8 (LO 5), AP Dempsey Inc. is a retailer operating in British Columbia. Dempsey uses the per- petual inventory system. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Dempsey Inc. for the month of January 2022. Date January 1 January 5 January 8 January 10 January 15 January 16 January 20 January 25 Description Beginning inventory Purchase Sale Sale return Purchase Purchase return Sale Purchase Quantity 100 140 110 10 55 5 90 20 Unit Cost or Selling Price $15 18 28 28 20 20 32 22 Instructions a. For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory, and (iii) gross profit. 1. LIFO. 2. FIFO. 3. Moving-average cost. (Round the weighted-average unit cost to three decimal places.) b. Compare results for the three cost flow assumptions.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Calculate cost of goods sold and ending
inventory under LIFO, FIFO, and
moving-average cost under the
perpetual system; compare gross profit
under each assumption.
a. (iii) Gross profit:
LIFO
FIFO
Average
$2,160
$2,560
$2,421
*P6.8 (LO 5), AP Dempsey Inc. is a retailer operating in British Columbia. Dempsey uses the per-
petual inventory system. All sales returns from customers result in the goods being returned to
inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts
are settled in cash. You are provided with the following information for Dempsey Inc. for the month
of January 2022.
Date
January 1
January 5
January 8
January 10
January 15
January 16
January 20
January 25
Description
Beginning inventory
Purchase
Sale
Sale return
Purchase
Purchase return
Sale
Purchase
Quantity
100
140
110
10
55
5
90
20
Unit Cost or
Selling Price
$15
18
28
28
20
20
32
22
Instructions
a. For each of the following cost flow assumptions, calculate (i) cost of goods sold, (ii) ending inventory,
and (iii) gross profit.
1. LIFO.
2. FIFO.
3. Moving-average cost. (Round the weighted-average unit cost to three decimal places.)
b. Compare results for the three cost flow assumptions.
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VIEWStep 2: Computation of cost of goods sold & ending inventory using Perpetual LIFO cash Flow:
VIEWStep 3: Computation of cost of goods sold & ending inventory using Perpetual FIFO cash Flow:
VIEWStep 4: Computation of cost of goods sold & ending inventory using Perpetual Moving Average cash Flow:
VIEWStep 5: Computation of sales revenue :
VIEWStep 6: Computation of Gross Profit :
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