WEEK 3 ASSIGNMENT
Week Three Exercise Assignment
1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows. Painting Cost
1/2 Beginning inventory Woods $21,000
4/19 Purchase Sunset 21,800
6/7 Purchase Earth 31,200
12/16 Purchase Moon 4,000
Woods and Moon were sold during the year for a total of $35,000. Determine the firm’s
a. cost of goods sold: 21,000 + 4,000 = 25,000
b. gross profit: 35,000 – 25,000 = 10, 000
c. ending inventory: 21,800 + 31,200 = 53,000
2. Inventory valuation methods: basic computations. The January beginning inven¬tory of the Gilette Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
Inventory Valuation Methods: Basic Computations
FIFO
Date Units available for sale
1-Jan 300
21-Feb 700
28-Mar 800
Total available for sale 1800
Cost of goods sold 1400
Units in ending inventory 1800 - 1400 = 400 Units Unit cost Total
Sales from January inventory 300 $40 $12,000
Sales from February purchase 700 $44 $30,800
Sales from 3/28 purchase 800 $50 $40,000
Total 1800 $82,800
Ending Inventory
March 28 Purchase 400 $50 $2,000
LIFO
Goods sold Units Units cost Total
Sales from 3/28 inventory 800 $50 $40,000
Sales from 2/21 purchase 700 $44 $30,800
Sales from January purchase 300 $40 $12,000
Total units 1800 Goods available for sale $82,800
Ending inventory 3/31 400
3. Perpetual inventory
1. Specific identification method. Boston Galleries uses the specific identification method for inventory valuation. Inventory information for several oil paintings follows. Painting Cost
1/2 Beginning inventory Woods $21,000
4/19 Purchase Sunset 21,800
6/7 Purchase Earth 31,200
12/16 Purchase Moon 4,000
Woods and Moon were sold during the year for a total of $35,000. Determine the firm’s
a. cost of goods sold: 21,000 + 4,000 = 25,000
b. gross profit: 35,000 – 25,000 = 10, 000
c. ending inventory: 21,800 + 31,200 = 53,000
2. Inventory valuation methods: basic computations. The January beginning inven¬tory of the Gilette Company consisted of 300 units costing $40 each. During the first quarter, the company purchased two batches of goods: 700 Units at $44 on February 21 and 800 units at $50 on March 28. Sales during the first quarter were 1,400 units at $75 per unit. The White Company uses a periodic inventory system. Using the White Company data, fill in the following chart to compare the results obtained under the FIFO, LIFO, and weighted-average inventory methods.
Inventory Valuation Methods: Basic Computations
FIFO
Date Units available for sale
1-Jan 300
21-Feb 700
28-Mar 800
Total available for sale 1800
Cost of goods sold 1400
Units in ending inventory 1800 - 1400 = 400 Units Unit cost Total
Sales from January inventory 300 $40 $12,000
Sales from February purchase 700 $44 $30,800
Sales from 3/28 purchase 800 $50 $40,000
Total 1800 $82,800
Ending Inventory
March 28 Purchase 400 $50 $2,000
LIFO
Goods sold Units Units cost Total
Sales from 3/28 inventory 800 $50 $40,000
Sales from 2/21 purchase 700 $44 $30,800
Sales from January purchase 300 $40 $12,000
Total units 1800 Goods available for sale $82,800
Ending inventory 3/31 400
3. Perpetual inventory