Using lifo ending merchandise inventory is 6960 and

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Using LIFO, ending merchandise inventory is $6,960 and cost of goods sold is $5,390. Using weighted-average, ending merchandise inventory is $7,475 and cost of goods sold is $4,875. Calculations: Goods Available for Sale: Date Quantity Unit Cost Total Cost Oct. 1 80 units × $ 57 = $ 4,560 3 10 units × $ 65 = $ 650 12 30 units × $ 70 = $ 2,100 18 70 units × $ 72 = $ 5,040 Totals 190 units $ 12,350 FIFO Ending Merchandise Inventory: Quantity Unit Cost Total Cost 70 units × $ 72 = $ 5,040 30 units × $ 70 = $ 2,100 10 units × $ 65 = $ 650 5 units × $ 57 = $ 285 Totals 115 units $ 8,075
P6A-43B, cont. FIFO Cost of Goods Sold: Cost of Goods Available for Sale $ 12,350 Ending Merchandise Inventory (8,075) Cost of Goods Sold $ 4,275 Alternatively, FIFO Cost of Goods Sold: = 75 units sold × $57 per unit = $4,275 LIFO Ending Merchandise Inventory: Quantity Unit Cost Total Cost 80 units × $ 57 = $ 4,560 10 units × $ 65 = $ 650 25 units × $ 70 = $ 1,750 Totals 115 units $ 6,960 LIFO Cost of Goods Sold: Cost of Goods Available for Sale $ 12,350 Ending Merchandise Inventory (6,960) Cost of Goods Sold $ 5,390 Alternatively, LIFO Cost of Goods Sold: Quantity Unit Cost Total Cost 70 units × $ 72 = $ 5,040 5 units × $ 70 = $ 350 Totals 75 units $ 5,390
P6A-43B, cont. Weighted-average cost per unit = $12,350 cost of goods available for sale / 190 units available for sale = $65 per unit Weighted-Average Ending Merchandise Inventory = 115 units × $65 per unit = $7,475 Weighted-Average Cost of Goods Sold: Cost of Goods Available for Sale $ 12,350 Ending Merchandise Inventory (7,475) Cost of Goods Sold $ 4,875 Alternatively, Weighted-Average Cost of Goods Sold: = 75 units sold × $65 per unit = $4,875 Requirement 2 Gross profit is $25,725 using FIFO, $24,610 using LIFO, and $25,125 using weighted-average. Calculations: FIFO LIFO Weighted- Average Sales Revenue $ 30,000 $ 30,000 $ 30,000 Cost of Goods Sold * (4,275) (5,390) (4,875) Gross Profit $ 25,725 $ 24,610 $ 25,125 *Calculated in Requirement 1. Requirement 3 LIFO results in the lowest income taxes and FIFO results in the highest net income. Under LIFO, the last costs into inventory are the first costs out to cost of goods sold. When inventory costs are rising, LIFO results in the highest cost of goods sold; thus, the lowest gross profit, net income, and taxable income. Under FIFO, the first costs into inventory are the first costs out to cost of goods sold. When inventory costs are rising, FIFO results in the lowest cost of goods sold; thus, the highest gross profit, net income, and taxable income. Weighted-average method amounts fall somewhere in between FIFO and LIFO since this method is based on the weighted average cost of inventory during the period.
P6B-44B Requirement 1 Estimated merchandise inventory on July 31 is $2,386,670. Calculations: Beginning Merchandise Inventory $ 268,000 Plus: Net Cost of Purchases 7,458,000 (a) Cost of Goods Available for Sale 7,726,000 Estimated Cost of Goods Sold Net Sales Revenue $ 8,753,000 (b) Less: Estimated Gross Profit of 39% 3,413,670 Estimated Cost of Goods Sold 5,339,330 Estimated Ending Merchandise Inventory $ 2,386,670 (a) Purchases $ 7,661,000 Purchase Discounts (171,000) Purchase Returns and Allowances (32,000) Net Purchases $ 7,458,000 (b) Sales Revenue $ 8,788,000 Sales Returns and Allowances (35,000) Net Sales Revenue $ 8,753,000 Requirement 2 KIDS COSTUMES Income Statement (Partial) Month Ended July 31 2015 Net Sales Revenue $ 8,753,000 Cost of Goods Sold (c) 5,339,330 Gross Profit (c) $ 3,413,670 (c) Estimated; calculated in Requirement 1.
P6B-45B Requirement 1 The estimated cost of merchandise inventory on June 30 is $433,384.

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