Montoure Company uses a perpetual inventory system. It entered into the following calendar-year...

Question:

Montoure Company uses a perpetual inventory system.

It had the following calendar-year 2013 purchases and sales transactions:

Date Activities Units Acquired at Cost Units Sold at Retail
Jan.1 Beginning inventory 540 units @ $40/unit
Feb.10 Purchase 320 units @ $36/unit
Mar.13 Purchase 100 units @ $24/unit
Mar.15 Sales 650 units @ $85/unit
Aug.21 Purchase 120 units @ $45/unit
Sept.5 Purchase 520 units @ $41/unit
Sept.10 Sales 640 units @ $85/unit
Totals 1,600 units 1,290 units

Required:

1. Compute Cost of Goods Available for Sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using:

(a) FIFO.

(b) LIFO.

(c) Weighted average.

(d) Specific identification.

For specific identification, units sold consist of 540 units from beginning inventory, 220 from the February 10 purchase, 100 from the March 13 purchase, 70 from the August 21 purchase, and 360 from the September 5 purchase.

(Round your average cost per unit to 2 decimal places.)

4. Compute gross profit earned by the company for each of the four costing methods.

(Round your average cost per unit to 2 decimal places.)

Perpetual Inventory System

The perpetual inventory system is an inventory accounting system where it records real-time the balance of inventories when there are sales, purchases, and other transactions affecting inventories. Companies using perpetual inventory use a computerized system to track inventories accurately.

Answer and Explanation: 1

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1. Cost of Goods Available for Sale = $62,240


Beg. inventories540 units x $40$21,600
Feb. 10 purchase320 units x $3611,520
Mar. 13 purchase100...

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Perpetual and Periodic Inventory Systems

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Chapter 6 / Lesson 5
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Explore the differences between perpetual and periodic inventory systems. Learn the definitions of perpetual and periodic inventory systems and find their uses.


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