E6A-27 Computing periodic inventory amounts
Learning Objective 7 Appendix 6A
Consider the data of the following companies which use the periodic inventory system:
Company
Net Sales
Revenue
Beginning
Merchandis
e Inventory
Net Cost of
Purchases
Ending
Merchandise
Inventory
Cost of
Goods Sold Gross Profit
Large $ 105,000 $ 23,000 $ 59,000 $ 22,000 $ (a) $ 45,000
Small (b) 27,000 94,000 (c) 99,000 40,000
Medium 96,000 (d) 58,000 24,000 68,000 (e)
Petite 80,000 8,000 (f) 6,500 (g) 44,000
Requirements
1. Supply the missing amounts in the preceding table.
2. Prepare the income statement for the year ended December 31, 2019, for Large Company, which uses the periodic inventory system.
Include a complete heading, and show the full computation of cost of goods sold. Large’s operating expenses for the year were $12,000.
SOLUTION
Requirement 1
Problems (Group A)
P6-28A Accounting for inventory using the perpetual inventory system—FIFO, LIFO, and weighted-average
Learning Objectives 2, 3
2. Ending Merch. Inv., $990
Fit Gym began January with merchandise inventory of 78 crates of vitamins that cost a total of $4,290. During the month, Fit Gym
purchased and sold merchandise on account as follows:
Jan. 5 Purchase 156 crates @ $ 64 each
13 Sale 180 crates @ $ 100 each
18 Purchase 114 crates @ $ 75 each
26 Sale 150 crates @ $ 116 each
Requirements
1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company’s cost of goods sold, ending
merchandise inventory, and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company’s cost of goods sold, ending
merchandise inventory, and gross profit.
3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company’s cost of goods
sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to
the nearest dollar.)
4. If the business wanted to pay the least amount of income taxes possible, which method would it choose?
SOLUTION
Requirement 1
P6-28A, cont.
Requirement 1, cont.
P6-28A, cont.
Requirement 2
P6-28A, cont.
Requirement 3
P6-28A, cont.
Requirement 3, cont.