1.Learning Objectives: LO3 LO5 LO7

W Team Surplus began July with 69 tents that cost 24 each. During the month, W Team Surplus made the following purchases at cost:

Jul 4 108 tents @ 26 = 2,808

Jul 19 153 tents @ 28 = 4,284

Jul 25 38 tents @ 29 = 1,102

W Team Surplus sold 316 tents, and at July 31 the ending inventory consists of 52 tents. The sale price of each tent was 55.

Requirements:

a.Determine the cost of goods sold and ending inventory amounts for July under the average cost, FIFO cost, and LIFO cost. Round average cost per unit four decimal places, and round all other amounts to the nearest dollar.

b.Explain why cost of goods sold is highest under LIFO. Be specific.

c.Prepare a W Team Surplus Income Statement for July and report gross profit. Operating expenses totalled 3,500. W Team Surplus uses average costing for inventory. The income tax rate is 32%.

1. Learning Objectives: LO3 LOS L07 W Team Surplus began July with 69 tents that cost 24 each. During the month, W Team Surplus made the following purchases at cost: Jul 4 108 tents @ 26 = 2,808 Jul 19 153 tents @ 28 = 4,284 Jul 25 38 tents @ 29= 1,102 W Team Surplus sold 316 tents, and at July 31 the ending inventory consists of 52 tents. The sale price of each tent was 55. Requirements: a. Determine the cost of goods sold and ending inventory amounts for July under the average cost, FIFO cost, and LIFO cost. Round average cost per unit four decimal places, and round all other amounts to the nearest dollar. b. Explain why cost of goods sold is highest under LIFO. Be specific. Prepare a W Team Surplus Income Statement for July and report gross profit. Operating expenses totalled 3,500. W Team Surplus uses average costing for inventory. The income tax rate is 32%