Answered: Markus Mrotek is the owner of Mrotek…

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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Markus Mrotek is the owner of Mrotek Co., a sole proprietorship. Mrotek is a wholesaler which buys ceiling fans from manufacturers and then resells them to retailers. Mrotek took an introductory accounting course in college and remembers that there are multiple methods for carrying inventory costs. He remembers FIFO, LIFO, and moving average. He has hired you as a consultant to help him determine which method is most beneficial for his business. Mrotek struggles with cash management and his goals are to increase cash inflows. The purchase and sales data for one month are listed below. Mrotek uses perpetual inventory. You must complete the inventory control sheets for the three inventory methods listed above. The worksheet tabs are labeled according to each method. At the bottom of each control sheet is an answer box for the total questions needed to make your final decision. If you fill in each of those answer boxes, the Cost of Goods Sold will transfer to the final comparison worksheet. On the Comparison worksheet, enter the sales revenue. Gross profit will automatically be calculated.

### Financial Accounting End of Week 2 - Excel

**Markus Mrotek is the owner of Mrotek Co., a sole proprietorship.**

Mrotek is a wholesaler who buys ceiling fans from manufacturers and then resells them to retailers. Mrotek took an introductory accounting course in college and remembers that there are multiple methods for carrying inventory costs. He remembers FIFO, LIFO, and moving average. He has hired you as a consultant to help him determine which method is most beneficial for his business. Mrotek struggles with cash management and aims to increase cash inflows.

The purchase and sales data for one month are listed below. Mrotek uses perpetual inventory. You must complete the inventory control sheets for the three inventory methods listed above. The worksheet tabs are labeled according to each method. At the bottom of each control sheet is an answer box for the total costs of goods sold needed to make your final decision. If you fill in each of those answer boxes, the Cost of Goods Sold will transfer to the final comparison worksheet. On the Comparison worksheet, enter the sales revenue. Gross profit will automatically be calculated.

**Instructions:**
Answer the final two questions. Each inventory control sheet is worth 7 points—3 points for completing the sheet and 2 points each for answering the questions. The comparison is worth 8 points—one point for each gross profit calculation and 2 points each for each question.

**Data Table:**

| Date | Description | Quantity | Cost $ | Sales Price $ |
|------------|---------------------|----------|--------|---------------|
| 1-Jun | Beginning Inventory | 40 | 40 | |
| 3-Jun | Purchase | 135 | 43 | |
| 10-Jun | Sale | 110 | | 70 |
| 18-Jun | Purchase | 55 | 46 | |
| 25-Jun | Sale | 65 | | 76 |
| 28-Jun | Purchase | 35 | 50 | |

### Explanation:

This data set will be used for calculating the cost of goods sold (COGS) and gross profit under different inventory valuation methods: FIFO (First In, First Out), LIFO (Last In, First Out), and Moving Average. The goal is to determine which method Mrotek Co.

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