Steel Mill began August with 50 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions: Requirements 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method. 2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method. 3. Prepare a perpetual inventory record for the merchandise inventory using the weighted average inventory costing method. 4. Determine the company's cost of goods sold for August using FIFO, LIFO, and weighted average inventory costing methods. 5. Compute gross profit for August using FIFO, LIFO, and weighted average inventory costing methods. 6. If the business wanted to maximize gross profit, which method would it select? Data Table Units Unit Cost Unit Sales Price $ 85 45 $ 90 $ $ 54 Aug. 3 Sale Aug. 8 Purchase Aug. 21 Sale Aug. 30 Purchase 85 88 15 58 Requirement 1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Purchases Cost of Goods Sold Inventory on Hand Unit Total Unit Total Unit Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Aug. 1 3 81 21 301 Totals Requirement 2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Purchases Cost of Goods Sold Units Total Inventory on Hand Unit Total Unit Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Aug. 1 3 81 21 300 Totals Requirement 3. Prepare a perpetual inventory record for the merchandise inventory using the weighted-average inventory costing method. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. Purchases Cost of Goods Sold Inventory on Hand Unit Unit Total Unit Total Total Date Quantity Cost Cost Quantity Cost Cost Quantity Cost Cost Aug. 1 3 8 21 301 Totals Requirement 4. Determine the company's cost of goods sold for August using FIFO, LIFO, and weighted average inventory costing methods. The cost of goods sold amount for August using FIFO inventory costing is The cost of goods sold amount for August using LIFO inventory costing is The cost of goods sold amount for August using weighted average inventory costing is Requirement 5. Compute gross profit for August using FIFO, LIFO, and weighted average inventory costing methods. Sales Revenue Cost of Goods Sold = Gross profit FIFO LIFO Weighted-average Requirement 6. If the business wanted to maximize gross profit, which method would it select? If the business wanted to maximize gross profit, it would select the method
