Friday, 11 October 2013

Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 60 units @ $50.20/unit Mar. 5 Purchase 205 units @ $55.20/unit Mar. 9 Sales 220 units @ $85.20/unit Mar. 18 Purchase 65 units @ $60.20/unit Mar. 25 Purchase 110 units @ $62.20/unit Mar. 29 Sales 90 units @ $95.20/unit Totals 440 units 310 units

Anthony Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March.

  Date Activities Units Acquired at Cost Units Sold at Retail
  Mar. 1   Beginning inventory   60  units  @ $50.20/unit        
  Mar. 5   Purchase   205  units  @ $55.20/unit        
  Mar. 9   Sales           220  units @ $85.20/unit
  Mar. 18   Purchase   65  units  @ $60.20/unit        
  Mar. 25   Purchase   110  units  @ $62.20/unit        
  Mar. 29   Sales           90  units @ $95.20/unit
           

   

 
          Totals   440  units     310  units  
           



   



 

Required:

Compute cost of goods available for sale and the number of units available for sale.
 
Explanation:
 
  Beginning inventory 60  units  @ $50.20 $ 3,012  
  March  5 205  units  @ $55.20   11,316  
  March 18 65  units  @ $60.20   3,913  
  March 25 110  units  @ $62.20   6,842  
 

 

  Units available 440  units      
 



     
  Cost of goods available for sale       $ 25,083  

 2. Compute the number of units in ending inventory.
 
Explanation:
 
  Units available (from part 1) 440  units
  Less: Units sold (220 + 90) 310  units
 

  Ending Inventory (units) 130  units


Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the March 9 sale consisted of 45 units from beginning inventory and 175 units from the March 5 purchase; the March 29 sale consisted of 25 units from the March 18 purchase and 65 units from the March 25 purchase. (Round your per unit costs to 2 decimal places)
 
Explanation:
(a) FIFO perpetual
  Date Goods Purchased Cost of Goods Sold Inventory Balance
  Mar. 1                       60  @ $50.20 = $ 3,012   
  Mar. 5   205  @ $55.20 = $ 11,316              60  @ $50.20      
                            205  @ $55.20 = $ 14,328   
  Mar. 9             60  @ $50.20 = $ 3,012    45  @ $55.20 = $ 2,484   
                  160  @ $55.20 = $ 8,832             
  Mar. 18   65  @ $60.20 = $ 3,913             45  @ $55.20      
                            65  @ $60.20 = $ 3,913   
  Mar. 25   110  @ $62.20 = $ 6,842             45  @ $55.20      
                            65  @ $60.20      
                            110  @ $62.20 = $ 13,239   
  Mar. 29             45  @ $55.20 = $ 2,484    20  @ $60.20      
                  45  @ $60.20 = $ 2,709    110  @ $62.20 = $ 8,046   
                        

     



                        $ 17,037             
                          



         

   
(b) LIFO perpetual
  Date Goods Purchased Cost of Goods Sold Inventory Balance
  Mar. 1                       60  @ $50.20 = $ 3,012   
  Mar. 5   205  @ $55.20 = $ 11,316              60  @ $50.20      
                            205  @ $50.20 = $ 14,328   
  Mar. 9             205  @ $55.20 = $ 11,316    45  @ $50.20 = $ 2,259   
                  15  @ $50.20 = $ 753             
  Mar. 18   65  @ $60.20 = $ 3,913              45  @ $50.20      
                            65  @ $60.20 = $ 6,172   
  Mar. 25   110  @ $62.20 = $ 6,842              45  @ $50.20      
                            65  @ $60.20      
                            110  @ $62.20 = $ 13,014   
                            45  @ $50.20      
  Mar. 29             90  @ $62.20 = $ 5,598    65  @ $60.20      
                         

20  @ $62.20 = $ 7,416   
                         $ 17,667         



                          



         

 
(c) Weighted Average perpetual
  Date Goods Purchased Cost of Goods Sold Inventory Balance
  Mar. 1                       60  @ $50.20 = $ 3,012   
  Mar. 5   205  @ $55.20 = $ 11,316             60  @ $50.20      
                            205  @ $55.20 = $ 14,328   
                            (avg. = $54.07)      
  Mar. 9             220  @ $54.07 = $ 11,895    45  @ $54.07 = $ 2,433   
                            (avg. = $54.07)      
  Mar. 18   65  @ $60.20 = $ 3,913             45  @ $54.07      
                            65  @ $60.20 = $ 6,346   
                            (avg. = $57.69)      
  Mar. 25   110  @ $62.20 = $ 6,842             45  @ $54.07      
                            65  @ $60.20      
                            110  @ $62.20 = $ 13,188   
                            (avg. = $59.94)      
  Mar. 29             90  @ $59.94 = $ 5,395    130  @ $59.94 = $ 7,793   
                        

     



                        $ 17,290             
                        



         

 
(d) Specific Identification
  Date Goods Purchased Cost of Goods Sold Inventory Balance
  Mar. 1                       60  @ $50.20 = $ 3,012   
  Mar. 5   205  @ $55.20 = $ 11,316              60  @ $50.20      
                            205  @ $55.20 = $ 14,328   
  Mar. 9             45  @ $50.20 = $ 2,259    15  @ $50.20      
                  175  @ $55.20 = $ 9,660    30  @ $55.20 = $ 2,409   
  Mar. 18   65  @ $60.20 = $ 3,913              15  @ $50.20      
                            30  @ $55.20      
                            65  @ $60.20 = $ 6,322   
  Mar. 25   110  @ $62.20 = $ 6,842              15  @ $50.20      
                            30  @ $55.20      
                            65  @ $60.20      
                            110  @ $62.20 = $ 13,164   
  Mar. 29             25  @ $60.20 = $ 1,505    15  @ $50.20      
                  65  @ $62.20 = $ 4,043    30  @ $55.20      
                        

40  @ $60.20      
                        $ 17,467    45  @ $62.20 = $ 7,616   
                        



     




Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 45 units from beginning inventory and 175 units from the March 5 purchase; the March 29 sale consisted of 25 units from the March 18 purchase and 65 units from the March 25 purchase. (Round your per unit costs to 2 decimal places and inventory balances.)