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HOMEWORK PROBLEM 2: Stocks, Inc., sells weight-lifting equipment. The sales and inventory records of the company for January through March 2017 were as follows: Weight

HOMEWORK PROBLEM 2:

Stocks, Inc., sells weight-lifting equipment. The sales and inventory records of the company for January through March 2017 were as follows:

Weight Sets

Unit Cost

Total Cost

Beginning inventory, January 1

460

$30

$13,800

Purchase, January 16

110

32

3,520

Sale, January 25 ($45 per set)

216

45

9,720

Purchase, February 16

105

36

3,780

Sale, February 27 ($40 per set)

307

40

12,280

Purchase, March 10

150

28

4,200

Sale, March 30 ($50 per set)

190

50

9,500

Determine the amounts for ending inventory, cost of goods sold, and gross profit under the FIFO, LIFO and Average Cost costing alternatives. Use the periodic inventory method, which means that all sales are assumed to happen at the end of the period no matter when they actually occurred. Round amounts to the nearest dollar.

Calculate Cost of Goods Available for Sale:

Date

Units

Price

Total

Beginning inventory

460

$30

Beginning Inventory

13,800

January 16

110

$32

+ purchases

3,520

February 16

105

$36

+ purchases

3,780

March 10

150

$28

+ purchases

4,200

TOTAL

825

126

= Goods available for sale

25,300

LIFO:

Calculate LIFO Ending Inventory:

How many sets were sold?

Ending inventory would be the oldest

Date

Price

Total

TOTAL ENDING INVENTORY

Calculate LIFO Cost of Goods Sold:

This would be the newest sets from inventory:

Date

Price

Total

$28

$36

$32

$30

LIFO COGS:

Calculate LIFO Gross Profit:

Gross Profit:

Sales:

-COGS

Gross Profit

Calculate Average Cost:

Average Cost per Unit: Goods Available for Sale/Number of Units

Average Cost Ending Inventory:

Average Cost of Goods Sold:

Average Cost Gross Profit:

Sales:

-COGS

Gross Profit

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