P7-3 Comparing and Contrasting the Effects of Inventory Costing Methods on Financial Statement Elements LO7-2, 7-3 Veverstop Corporation sells item A as part of its product line. Information about the beginning inventory, purchases, and sales of item A are given in the following table for the first six months of the current year. The company uses a perpetual inventory system: Required: 1. Compute the cost of ending inventory by using the weighted-average costing method. (Do not round intermediate calculations and round the final answer to 2 decimal places.) 2. Compute the gross profit for the first six months of the current year by using the FIFO costing method. (Do not round intermediate calculations and round the final answer to 2 decimal places.) 3. Would the gross profit be higher, lower, or the same if Neverstop used the weighted-average costing method rather than the FIFO method? Remain the same Lower Higher 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet 5> Record cost of sales on goods sold on account. Note: Enter debits before credits. 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet 566> Record purchase of goods on account. Note: Enter debits before credits. 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Note: Enter debits before credits. 4. Prepare journal entries to record the purchase and sale transactions, as well as the cost of sales, assuming that all sales and purchase transactions are on account and that the weighted-average method is used. (Do not round intermediate calculations and round the final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Journal entry worksheet Record purchase of goods on account. Note: Enter debits before credits. Assume that because of a clerical error, the ending inventory is reported to be 1,025 units rather than the actual number of units (1,125 on hand. 5a. If FIFO is used, calculate the amount of the understatement or overstatement in the cost of sales for the first six months of the current year
