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Cost Flow Methods The following three identical units of Item LO3V are purchased during April: Item Beta Units Cost April 2 Purchase 1 $97 April 15 Purchase 1 99 April 20 Purchase 1 101 Total $297 Average cost per unit $99 ($297 3 units) Assume that one unit is sold on April 27 for $140. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method. Gross Profit Ending Inventory a. First-in, first-out (FIFO) $4 b. Last-in, first-out (LIFO) $ c. Weighted average cost $4

Cost Flow Methods The following three identical units of Item LO3V are purchased during April: Item Beta Units Cost April 2 Purchase 1 $97 April 15 Purchase 1 99 April 20 Purchase 1 101 Total $297 Average cost per unit $99 ($297 3 units) Assume that one unit is sold on April 27 for $140. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method. Gross Profit Ending Inventory a. First-in, first-out (FIFO) $4 b. Last-in, first-out (LIFO) $ c. Weighted average cost $4

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Cost Flow Methods** The following three identical units of Item LO3V are purchased during April: | Date | Item Beta | Units | Cost | |----------|-----------|-------|------| | April 2 | Purchase | 1 | $97 | | April 15 | Purchase | 1 | $99 | | April 20 | Purchase | 1 | $101 | | **Total** | | **3** | **$297** | **Average cost per unit:** $99 ($297 ÷ 3 units) **Scenario:** Assume that one unit is sold on April 27 for $140. Determine the gross profit for April and ending inventory on April 30 using the following methods: - **(a) First-in, first-out (FIFO)** - **(b) Last-in, first-out (LIFO)** - **(c) Weighted average cost method** | Method | Gross Profit | Ending Inventory | |-------------------------------|--------------|------------------| | a. First-in, first-out (FIFO) | | | | b. Last-in, first-out (LIFO) | | | | c. Weighted average cost | | | This exercise aims to help students understand different inventory valuation methods and their impact on financial statements.
Transcribed Image Text:**Cost Flow Methods** The following three identical units of Item LO3V are purchased during April: | Date | Item Beta | Units | Cost | |----------|-----------|-------|------| | April 2 | Purchase | 1 | $97 | | April 15 | Purchase | 1 | $99 | | April 20 | Purchase | 1 | $101 | | **Total** | | **3** | **$297** | **Average cost per unit:** $99 ($297 ÷ 3 units) **Scenario:** Assume that one unit is sold on April 27 for $140. Determine the gross profit for April and ending inventory on April 30 using the following methods: - **(a) First-in, first-out (FIFO)** - **(b) Last-in, first-out (LIFO)** - **(c) Weighted average cost method** | Method | Gross Profit | Ending Inventory | |-------------------------------|--------------|------------------| | a. First-in, first-out (FIFO) | | | | b. Last-in, first-out (LIFO) | | | | c. Weighted average cost | | | This exercise aims to help students understand different inventory valuation methods and their impact on financial statements.
**Perpetual Inventory Using FIFO** Beginning inventory, purchases, and sales for Item Zeta9 are as follows: - **Oct. 1**: Inventory - 65 units @ $21 - **Oct. 7**: Sale - 46 units - **Oct. 15**: Purchase - 49 units @ $22 - **Oct. 24**: Sale - 26 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine: (a) the cost of goods sold on October 24 (b) the inventory on October 31 a. Cost of goods sold on October 24: $______ b. Inventory on October 31: $______
Transcribed Image Text:**Perpetual Inventory Using FIFO** Beginning inventory, purchases, and sales for Item Zeta9 are as follows: - **Oct. 1**: Inventory - 65 units @ $21 - **Oct. 7**: Sale - 46 units - **Oct. 15**: Purchase - 49 units @ $22 - **Oct. 24**: Sale - 26 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine: (a) the cost of goods sold on October 24 (b) the inventory on October 31 a. Cost of goods sold on October 24: $______ b. Inventory on October 31: $______
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