### Inventory Management and Cost Flow MethodsThree identical units of merchandise were purchased during July, detailed as follows:| Date | Product Basic H | Units | Cost ||-----------|-----------------|-------|------|| July 3 | Purchase | 1 | $15 || July 10 | Purchase | 1 | $18 || July 24 | Purchase | 1 | $21 || **Total** | | **3** | **$54** || **Average cost per unit** | | | **$18** |Assume one unit sells on July 28 for $27.Determine the gross profit, cost of goods sold, and ending inventory on July 31 using the following cost flow methods:1. **First-in, first-out (FIFO)**2. **Last-in, first-out (LIFO)**3. **Weighted average**#### Cost Analysis TableThe table below allows calculation of the following for each cost method:- **Gross Profit**- **Cost of Goods Sold**- **Ending Inventory**| Method | Gross Profit | Cost of Goods Sold | Ending Inventory ||---------------------------|--------------|--------------------|------------------|| a. First-in, first-out | $ | $ | $ || b. Last-in, first-out | $ | $ | $ || c. Weighted average | $ | $ | $ |Each method affects financial outcomes differently due to the sequence of inventory usage and cost calculations. The FIFO method assumes the oldest inventory costs are used first, LIFO uses the most recent costs, and the weighted average calculates costs by averaging the costs of available units.

Name: ### Inventory Management and Cost Flow MethodsThree identical units o
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Description: ### Inventory Management and Cost Flow MethodsThree identical units of merchandise were purchased during July, detailed as follows:| Date | Product Basic H | Units | Cost ||-----------|-----------------|-------|------|| July 3 | Purchase

FIFO is first in first out which means inventory bought first is sold first.LIFO is last in first out method means inventory bought last is sold first.Inventory means the detailed list or stock of items, goods, or materials held by a business or individual.Ending inventory is the difference between number of units available for sale and number of units sold.Gross profitCost of goods soldEnding inventoryaFIFO27-15 = $12$1518+21 = $39bLIFO27-21 = $6$2115+18 = $33cAverage27-18 = $9$1818*2 = $36Note:Gross profit = Sales - cost of goods soldGross profitCost of goods soldEnding inventoryaFIFO$12$15$39bLIFO$6$21$33cAverage$9$18$36

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Three identical units of merchandise were purchased during July, as follows: Units Cost $15 18 Date Product Basic H July 3 Purchase 10 Purchase 24 Purchase Total 1 1 1 a. First-in, first-out b. Last-in, first-out c. Weighted average 3 21 $54 $18 Average cost per unit Assume one unit sells on July 28 for $27. Determine the gross profit, cost of goods sold, and ending inventory on July 31 using the (a) first-in, first-out, (b) last-in, first-out, and (c) weighted average cost flow methods. Gross Profit Cost of Goods Sold Ending Inventory $

Three identical units of merchandise were purchased during July, as follows: Units Cost $15 18 Date Product Basic H July 3 Purchase 10 Purchase 24 Purchase Total 1 1 1 a. First-in, first-out b. Last-in, first-out c. Weighted average 3 21 $54 $18 Average cost per unit Assume one unit sells on July 28 for $27. Determine the gross profit, cost of goods sold, and ending inventory on July 31 using the (a) first-in, first-out, (b) last-in, first-out, and (c) weighted average cost flow methods. Gross Profit Cost of Goods Sold Ending Inventory $

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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