Montoure Company uses a perpetual inventory system. It entered into the following calendar-year...
Question:
Montoure Company uses a perpetual inventory system. It entered into the following calendar-year 2015 purchases and sales transactions.
| Date | Activities | Units Acquired at Cost | Units Sold at Retail |
|---|---|---|---|
| Jan.1 | Beginning inventory | 540 units @ $55 per unit | |
| Feb.10 | Purchase | 460 units @ $53 per unit | |
| Mar.13 | Purchase | 100 units @ $40 per unit | |
| Mar.15 | Sales | 745 units @ $80 per unit | |
| Aug.21 | Purchase | 170 units @ $61 per unit | |
| Sept.5 | Purchase | 430 units @ $54 per unit | |
| Sept.10 | Sales | 600 units @ $80 per unit | |
| Totals | 1,700 units | 1,345 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, and (d) specific identification. For specific identification units sold consist of 540 units from beginning inventory, 360 from the February 10 purchase, 100 from the March 13 purchase, 120 from the August 21 purchase, and 225 from the September 5 purchase.
4. Compute gross profit earned by the company for each of the four costing methods.
Inventory Valuation Methods
There are different methods used for inventory valuation. These are specific identification, First-in First-out (FIFO), Last-in First-out (LIFO) and weighted average costing.
Answer and Explanation: 1
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1. Cost of goods available for sale is $91,700 while units available for sale is 1,700.
To compute for the cost of goods available for sale, let's...
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