P6-33A Accounting for inventory using the perpetual inventory system—
Question # 00028156
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Updated on: 10/13/2014 07:31 AM Due on: 02/28/2015
P6-33A Accounting for inventory using the perpetual inventory system—
FIFO, LIFO, and Weighted-Average, and comparing FIFO, LIFO, and
Weighted-Average
Decorative Steel began August with 55 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions:
Units Unit Cost Unit Sale Price
Aug. 3 Sale 45 $83
Aug. 8 Purchase 75 $52
Aug. 21 Sale 70 $85
Aug. 30 Purchase 10 $55
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?
FIFO, LIFO, and Weighted-Average, and comparing FIFO, LIFO, and
Weighted-Average
Decorative Steel began August with 55 units of iron inventory that cost $35 each. During August, the company completed the following inventory transactions:
Units Unit Cost Unit Sale Price
Aug. 3 Sale 45 $83
Aug. 8 Purchase 75 $52
Aug. 21 Sale 70 $85
Aug. 30 Purchase 10 $55
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?
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Solution: P6-33A Accounting for inventory using the perpetual inventory system—