Question
The following information is related to radios for the Couples Company for the month of July. Date Transaction Units In Units Cost Total Units Sold
The following information is related to radios for the Couples Company for the month of July.
Date | Transaction | Units In | Units Cost | Total | Units Sold | Selling Price | Total | |
July | 1 | Balance | 100 | $4.10 | $ 410 | |||
6 | Purchase | 800 | 4.30 | 3,440 | ||||
7 | Sale | 300 | $7.00 | $ 2,100 | ||||
10 | Sale | 300 | 7.30 | 2,190 | ||||
12 | Purchase | 400 | 4.51 | 1,804 | ||||
15 | Sale | 200 | 7.40 | 1,480 | ||||
18 | Purchase | 300 | 4.60 | 1,380 | ||||
22 | Sale | 400 | 7.40 | 2,960 | ||||
25 | Purchase | 500 | 4.58 | 2,290 | ||||
30 | Sale | 200 | 7.50 | 1,500 | ||||
Totals | 2,100 | $9,324 | 1,400 | $10,230 |
Instructions:
a. Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. (Ignore taxes.)
1. FIFO.
2. Weighted-average.
b. Answer the following questions.
1. Which of the methods used above will yield the highest figure for gross profit for the income statement? Explain why.
2. Which of the methods used above will yield the highest figure for ending inventory for the statement of financial position? Explain why.
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