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E6-18 Measuring ending inventory and cost of goods sold in a perpetual inventory system—Weighted-average
Learning Objective 2
1. COGS $3,236
Requirements
1. Prepare Golf Unlimited’s perpetual inventory record for the putters assuming Golf Unlimited uses the weighted-average inventory costing
method. Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar. Then identify the cost of
ending inventory and cost of goods sold for the month.
2. Journalize Golf Unlimited’s inventory transactions using the weighted-average inventory costing method. (Assume purchases and sales
are made on account.)
SOLUTION
Requirement 1
E6-18, cont.
Requirement 2
E6-18, cont.
Requirement 2, cont.
E6-19 Comparing amounts for cost of goods sold, ending inventory, and gross profit—FIFO and LIFO
Learning Objectives 2, 3
2. Ending Merch. Inv. $73
Assume that Toys Galore store bought and sold a line of dolls during December as follows:
Dec. 1 Beginning merchandise inventory 13 units @ $ 9 each
8 Sale 8 units @ $ 22 each
14 Purchase 16 units @ $ 14 each
21 Sale 14 units @ $ 22 each
Requirements
1. Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the FIFO inventory costing method.
2. Compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the LIFO inventory costing method.
3. Which method results in a higher cost of goods sold?
4. Which method results in a higher cost of ending merchandise inventory?
5. Which method results in a higher gross profit?
SOLUTION
Requirement 1
E6-19, cont.
Requirement 2
E6-19, cont.
Requirement 3
E6-20 Comparing cost of goods sold and gross profit—FIFO, LIFO, and weighted-average
methods
Learning Objectives 2, 3
1. COGS $2,140
Assume that AB Tire Store completed the following perpetual inventory transactions for a line of tires:
May 1 Beginning merchandise inventory 16 tires @ $ 65 each
11 Purchase 10 tires @ $ 78 each
23 Sale 12 tires @ $ 88 each
26 Purchase 14 tires @ $ 80 each
29 Sale 18 tires @ $ 88 each
Requirements
1. Compute cost of goods sold and gross profit using the FIFO inventory costing method.
2. Compute cost of goods sold and gross profit using the LIFO inventory costing method.
3. Compute cost of goods sold and gross profit using the weighted-average inventory costing
method. (Round weighted-average cost per unit to the nearest cent and all other amounts to
the nearest dollar.)
4. Which method results in the largest gross profit, and why?
SOLUTION
