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1
1. Calculate Cost of Goods Sold (COGS) and Ending Inventory (EI) under FIFO, LIFO, and W/A (Periodic Inventory).
The units of an item available for sale during the year were as follows:
Jan. 1 Inventory 6 units at $28
Feb. 4 Purchase 12 units at $30
July 20 Purchase 14 units at 32
Dec. 30 Purchase 8 units at $33
There are 11 units of the item in the physical inventory at December 31.
2. If the sale price per item is $50 each, how much is the gross margin under each method?
I have the first portion done (Question 1) on the attachment. Question 2 I'm confused.
Expert Solution
Response:
Jan. 1 Inventory 6 units at $28= 168
Feb. 4 Purchase 12 units at $30= 360
July 20 Purchase 14 units at $32= 448
Dec. 30 Purchase 8 units at $33= 264
40 units $1240  Cost of Goods Available for Sale
-Ending Inv 11
Sold 29
Cost of ending inventory under FIFO: -
Date of purchase No. Of Units Rate Amount
Dec. 30 8 33 264
July 20 3 32 96
------
Total 11 360
Cost of ending inventory under LIFO
Date of purchase No. of Units Rate Amount
Jan 1 6 28 168
Feb. 4 5 30 150
--------
Total 11 318
Cost of ending inventory under weighted average (Periodic)
Cost of Goods Available for Sale 1240
No. of units Available for Sale 40
Weighted average price 31
Cost of ending inventory (31*11) 341
1.Calculation of cost of goods sold
FIFO LIFO W/A (Periodic)
Cost of Goods Available for Sale 1240 1240 1240
Less Ending inventory 360 318 341
------- ------- --------
Cost of goods sold 880 922 899
2.Calculation of gross margin
FIFO LIFO W/A (Periodic)
Sales (50* 29) 1450 1450 1450
Cost of goods sold 880 922 899
-------- --------- --------
Gross margin 570 528 551
Gross margin percentage 39.31 36.41 38
(Gross margin/sales*100)
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