Part 1:
The following table uses the four inventory costing method and displays the cost of ending inventory for Click Cameras:
| Specific Identification |
FIFO |
LIFO |
Weighted Average Cost |
| $21,476.00 |
$21,581.40 |
$21,410.93 |
$21,447.36 |
Click Cameras also reported the following amounts:
| Net sales |
$53,874.92 |
| Purchases available for sale |
$57,621.31 |
Instruction:
Use the information given above and determine the cost of merchandise sold and the gross profit on sales for each of the inventory costing methods.
Part 2:
Two Wheels operates on a fiscal year beginning January 1. At the beginning of the year, the shop had 6 bicycles @$394 each (opening inventory). During the year the business made the following purchases:
| Date |
Bicycle |
Cost |
| Jan.20 |
4 |
$399 |
| Mar. 5 |
5 |
$415 |
| Apr. 23 |
7 |
$419 |
| Aug. 14 |
4 |
$423 |
| Oct. 3 |
6 |
$430 |
| Nov. 17 |
3 |
$435 |
There were seven bicycles in inventory at the end of the period. During the year, the bicycles were sold for $675 each.
Instructions:
- Calculate the cost of the ending inventory using the FIFO, LIFO, and weighted average cost methods.
- Prepare a partial income statement for each inventory costing method showing the sales and the calculation of gross profit on sales.
- Assume that the sales and purchases are net amounts.