During the year, TRC Corporation has the following inventory transactions. Date Transaction Number of Units Unit Cost Total Cost January 1 Beginning inventory 60 $52 $3,120 April 7 Purchase 140 54 7,560 July 16 Purchase 210 57 11,970 October 6 Purchase 120 58 6,960 530 $29,610 For the entire year, the company sells 450 units of inventory for $70 each. Required: 1-a & b. Using FIFO, calculate ending inventory and cost of goods sold. 1-c & d. Using FIFO, calculate sales revenue and gross profit. 2-a & b. Using LIFO, calculate ending inventory and cost of goods sold. 2-c & d. Using LIFO, calculate sales revenue and gross profit. 3-a & b. Using weighted-average cost, calculate ending inventory and cost of goods sold. 3-c & d. Using weighted-average cost, calculate sales revenue and gross profit. 4. Determine which method will result in higher profitability when inventory costs are rising.
During the year, TRC Corporation has the following inventory transactions. Date Transaction Number of Units Unit Cost Total Cost January 1 Beginning inventory 60 $52 $3,120 April 7 Purchase 140 54 7,560 July 16 Purchase 210 57 11,970 October 6 Purchase 120 58 6,960 530 $29,610 For the entire year, the company sells 450 units of inventory for $70 each. Required: 1-a & b. Using FIFO, calculate ending inventory and cost of goods sold. 1-c & d. Using FIFO, calculate sales revenue and gross profit. 2-a & b. Using LIFO, calculate ending inventory and cost of goods sold. 2-c & d. Using LIFO, calculate sales revenue and gross profit. 3-a & b. Using weighted-average cost, calculate ending inventory and cost of goods sold. 3-c & d. Using weighted-average cost, calculate sales revenue and gross profit. 4. Determine which method will result in higher profitability when inventory costs are rising.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During the year, TRC Corporation has the following inventory transactions.
| Date | Transaction | Number of Units | Unit Cost | Total Cost |
|---|---|---|---|---|
| January 1 | Beginning inventory | 60 | $52 | $3,120 |
| April 7 | Purchase | 140 | 54 | 7,560 |
| July 16 | Purchase | 210 | 57 | 11,970 |
| October 6 | Purchase | 120 | 58 | 6,960 |
| 530 | $29,610 |
For the entire year, the company sells 450 units of inventory for $70 each.
Required:
1-a & b. Using FIFO, calculate ending inventory and cost of goods sold.
1-c & d. Using FIFO, calculate sales revenue and gross profit.
2-a & b. Using LIFO, calculate ending inventory and cost of goods sold.
2-c & d. Using LIFO, calculate sales revenue and gross profit.
3-a & b. Using weighted-average cost, calculate ending inventory and cost of goods sold.
3-c & d. Using weighted-average cost, calculate sales revenue and gross profit.
4. Determine which method will result in higher profitability when inventory costs are rising.
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Step 1: Introduce to FIFO, LIFO and Weighted Average Method
VIEWStep 2: Working for sales revenue
VIEWStep 3: Working for cost of goods sold, ending inventory and gross profit using FIFO
VIEWStep 4: Working for cost of goods sold, ending inventory and gross profit using LIFO
VIEWStep 5: Working for cost of goods sold, ending inventory and gross profit using average cost
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