Perpetual Inventory Cost Flow Alternatives

Pump-It, Inc., sells weight-lifting
equipment. The...

Question

Perpetual Inventory Cost Flow Alternatives 

Pump-It, Inc., sells weight-lifting
equipment. The sales and inventory records of the company for January through
March 2012 were as follows:



Required: 

1. Determine the amounts for ending
inventory, cost of goods sold, and gross margin under the following costing
alternatives. Use the perpetual inventory method. Round amounts to the nearest
dollar. 

a. FIFO 

b. LIFO 

c. Average cost (calculate unit costs to
the nearest cent) 

2. Interpretive Question: Which alternative
results in the highest gross margin? Why?

Prince · Accepted Answer

Sheet1
		Figures Used
		Solution: By FIFO
	Date	Particular	Purchases			Sales			Cost of Goods Sold			Closing Balance
			Unit	Rate	Amount	Unit	Rate	Amount	Unit	Rate	Amount	Unit	Rate	Amount
	1-Jan-12	Opening Inventory										460	$30.00	$13,800.00
	16-Jan-12	Purchases	110	$32.00	$3,520.00							460	$30.00	$13,800.00
												110	$32.00	$3,520.00
	25-Jan-12	Sales				216	$45.00	$9,720.00	216	$30.00	$6,480.00	244	$30.00	$7,320.00
												110	$32.00	$3,520.00
	16-Feb-12	Purchases	105	$36.00	$3,780.00							244	$30.00	$7,320.00
												110	$32.00	$3,520.00
												105	$36.00	$3,780.00
	27-Feb-12	Sale				307	$40.00	$12,280.00	244	$30.00	$7,320.00	47	$32.00	$1,504.00
									63	$32.00	$2,016.00	105	$36.00	$3,780.00
	10-Mar-12	Purchases	150	$28.00	$4,200.00							47	$32.00	$1,504.00
												105	$36.00	$3,780.00
												150	$28.00	$4,200.00
	30-Mar-12	Sale				190	$150.00	$28,500.00	47	$32.00	$1,504.00	112	$28.00	$3,136.

Perpetual Inventory Cost Flow Alternatives Pump-It, Inc., sells weight-lifting equipment. The sales and inventory records of the company for January through March 2012 were as follows: Required: 1....

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