Cost Flow Methods

Three identical units of Item K113 are purchased during July, as shown below.

	Item K113		Units		Cost
July 9	Purchase		1		$138
July 17	Purchase		1		142
July 26	Purchase		1		146
Total			3		$426
Average cost per unit					$142	($426 3 units)

Assume that one unit is sold on July 31 for $186. Determine the gross profit for July and ending inventory on July 31 using the (a) The method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred.first-in, first-out (FIFO); (b) A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue.last-in, first-out (LIFO); and (c) weighted average cost methods.