Chapter 6, Problem P6.29APGA

Accounting for inventory using the perpetual inventory system—FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average

Learning Objective 2, 3 5. FIFO GP $5,235

Steel Mill began August with 50 units of iron inventory that cost 535 each. During August, the company completed the following inventory transactions:

		Units	Unit Cost	unit Sales Price
Aug.3	Sale	45		$85
8	Purchase	90	$54
21	Sale	85		88
30	purchase	15	58

Requirements

1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method.
2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method.
3. Prepare a perpetual inventory record for the merchandise inventory using the weighted-average inventory costing method.
4. Determine the company’s cost of goods sold for August using FIFO, LIFO, and weighted-average inventory costing methods.
5. Compute gross profit for August using FIFO, LIFO, and weighted-average inventory costing method 6. If the business wanted to maximize gross profit, which method would it select?