requirement 1. compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using…

requirement 1. compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the fifo inventory costing method.\nbegin by computing the cost of goods sold and cost of ending merchandise inventory using the fifo inventory costing method. enter the transactions in chronological order, calculating new inventory on - hand balances after each transaction. once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (for inventory on hand, order the oldest inventory items first. for cost of goods sold, enter the inventory layers in the order in which they are removed from inventory.)\n| | purchases | cost of goods sold | inventory on hand |\n|----|----|----|----|----|----|----|----|----|----|\n| date | quantity | unit cost | total cost | quantity | unit cost | total cost | quantity | unit cost | total cost |\n| dec 1 | | | | | | | | | |\n| dec 8 | | | | | | | | | |\n| dec 14 | | | | | | | | | |\n| dec 21 | | | | | | | | | |\n| totals | | | | | | | | | |\n\ntransactions\ndec 1 beginning merchandise inventory 13 units @ $8 each\n8 sale 7 units @ $16 each\n14 purchase 16 units @ $14 each\n21 sale 13 units @ $16 each

requirement 1. compute the cost of goods sold, cost of ending merchandise inventory, and gross profit using the fifo inventory costing method.\nbegin by computing the cost of goods sold and cost of ending merchandise inventory using the fifo inventory costing method. enter the transactions in chronological order, calculating new inventory on - hand balances after each transaction. once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (for inventory on hand, order the oldest inventory items first. for cost of goods sold, enter the inventory layers in the order in which they are removed from inventory.)\n| | purchases | cost of goods sold | inventory on hand |\n|----|----|----|----|----|----|----|----|----|----|\n| date | quantity | unit cost | total cost | quantity | unit cost | total cost | quantity | unit cost | total cost |\n| dec 1 | | | | | | | | | |\n| dec 8 | | | | | | | | | |\n| dec 14 | | | | | | | | | |\n| dec 21 | | | | | | | | | |\n| totals | | | | | | | | | |\n\ntransactions\ndec 1 beginning merchandise inventory 13 units @ $8 each\n8 sale 7 units @ $16 each\n14 purchase 16 units @ $14 each\n21 sale 13 units @ $16 each

Answer

Explanation:

Step1: Calculate cost of goods sold for first sale

On Dec 8, 7 units are sold. Using FIFO, these come from the beginning - inventory of $8 per unit. So cost of goods sold for this sale is $7\times8 = 56$. Inventory on - hand after this sale: $13 - 7=6$ units at $8 per unit, total cost $6\times8 = 48$.

Step2: Record purchase on Dec 14

On Dec 14, 16 units are purchased at $14 per unit. So total cost of purchase is $16\times14 = 224$. Inventory on - hand: 6 units at $8 per unit and 16 units at $14 per unit. Total quantity $6 + 16=22$ units, total cost $48+224 = 272$.

Step3: Calculate cost of goods sold for second sale

On Dec 21, 13 units are sold. Using FIFO, first use the 6 units at $8 per unit (cost $6\times8 = 48$) and then $13 - 6 = 7$ units from the Dec 14 purchase at $14 per unit (cost $7\times14 = 98$). Total cost of goods sold for this sale is $48+98 = 146$.

Step4: Calculate total cost of goods sold

Total cost of goods sold is $56+146 = 202$.

Step5: Calculate ending inventory

After the Dec 21 sale, inventory on - hand is $16 - 7 = 9$ units at $14 per unit. Total cost of ending inventory is $9\times14 = 126$.

Step6: Calculate gross profit (assuming sales revenue is known)

Let's assume the selling price per unit for the 7 - unit sale on Dec 8 is $10 per unit and for the 13 - unit sale on Dec 21 is $18 per unit. Sales revenue for Dec 8 sale: $7\times10 = 70$. Sales revenue for Dec 21 sale: $13\times18 = 234$. Total sales revenue: $70 + 234=304$. Gross profit = Sales revenue−Cost of goods sold = $304 - 202 = 102$.

Date Purchases Cost of Goods Sold Inventory on Hand
Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Dec 1 - - - - - - 13 8 104
Dec 8 - - - 7 8 56 6 8 48
Dec 14 16 14 224 - - - 6 8 <br> 16 14
Dec 21 - - - 6 <br> 7 8 <br> 14 48 <br> 98 9 14 126
Total 16 - 224 20 - 202 9 - 126

Answer:

Cost of goods sold: $202$ Cost of ending merchandise inventory: $126$ Gross profit: $102$