Golden Eagle Company began operations in 2014 by selling a single product. Data on purchases and sales for the year were as follows: Purchases: Date Units Purchased Unit Cost Total Cost April 6 31,000 36.60 1,134,600 May 18 33,000 39.00 1,287,000 June 6 40,000 39.60 1,584,000 July 10 40,000 42.00 1,680,000 Aug 10 27,200 42.75 1,162,800 Oct 25 12,800 43.50 556,800 Nov 4 8,000 44.85 358,800 Dec 10 8,000 48.00 384,000 Total 200,000 8,148,000 SALES: April 16,000 units May 16,000 June 20,000 Jul 24,000 Aug 28,000 Sep 28,000 Oct 18,000 Nov 10,000 Dec 8,000 Total Units 168,000 Total Sales 10,000,000 On January 2015, the president of the company, Connie Kilmer, asked for your advise on costing the 32,000 unit physical inventory that was taken on Decemer 31, 2014. Moreover, since the firm plans to expand its product line, she asked for your advise on the use of a perpetual inventory system in the future. INSTRUCTION: Determine the cost of the December 31, 2014 inventory under the periodic system using the (a) first in, first out method, (b) last in first out method, (c ) weighted average cost method. Determine the gross profit for the year under each of the three methods in (1).

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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Golden Eagle Company began operations in 2014 by selling a single product. Data on purchases and sales for the year were as follows:

Purchases:

Date	Units Purchased	Unit Cost	Total Cost
April 6	31,000	36.60	1,134,600
May 18	33,000	39.00	1,287,000
June 6	40,000	39.60	1,584,000
July 10	40,000	42.00	1,680,000
Aug 10	27,200	42.75	1,162,800
Oct 25	12,800	43.50	556,800
Nov 4	8,000	44.85	358,800
Dec 10	8,000	48.00	384,000
Total	200,000		8,148,000

SALES:

April	16,000 units
May	16,000
June	20,000
Jul	24,000
Aug	28,000
Sep	28,000
Oct	18,000
Nov	10,000
Dec	8,000
Total Units	168,000
Total Sales	10,000,000

On January 2015, the president of the company, Connie Kilmer, asked for your advise on costing the 32,000 unit physical inventory that was taken on Decemer 31, 2014. Moreover, since the firm plans to expand its product line, she asked for your advise on the use of a perpetual inventory system in the future.

INSTRUCTION:

Determine the cost of the December 31, 2014 inventory under the periodic system using the (a) first in, first out method, (b) last in first out method, (c ) weighted average cost method.
Determine the gross profit for the year under each of the three methods in (1).

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