Question 1
During The Year, TRC Corporation Has The Following Inventory Transactions. Unit Number Of Units Total Cost $47 $ 2,585
Question 2
During the year, TRC Corporation has the following inventory transactions:
For the entire year, the company sells 411 units of inventory for $52 each.
Calculate ending inventory, cost of goods sold, sales revenue, and gross profit according to:
1. FIFO method
2. LIFO method
3. Weighted Average method
Answer to question 1
Answer to question 2
1. FIFO method:
Calculating cost of goods sold, ending inventory, and gross profit using the FIFO method:
| Date | Particulars | unit(A) | rate(B) | Amount(A X B) |
| Jan 1 | Beginning inventory | 42 | $34 | $1,428 |
| Apr 7 | Purchase | 122 | $36 | $4,392 |
| Jul.16 | purchase | 192 | $38 | $7,488 |
| oct 6 | Purchase | 55 | $40 | $2,200 |
| Total | Cost of goods sold | 411 | $15,508 |
Calculating Gross margin using FIFO method:
| Date | Particulars | unit(A) | rate(B) | Amount(A X B) |
| Sales | 411 | $52 | $21,372 | |
| Cost of goods sold | 411 | $15,508 | ||
| Gross margin | $5,864 |
Calculating ending inventory Under the FIFO method:
| Date | Particulars | unit(A) | rate(B) | Amount(A X B) |
| Oct 6 | Purchase | 47 | $40 | $1,880 |
| Total ending inventory | 47 | $40 | $1,880 |
Therefore, the cost of good sold, gross margin, and ending inventory is calculated at $15,508, $5,864, and $1,880 respectively.
2. LIFO method:
Calculating the cost of goods sold using the LIFO method:
| Date | Particulars | unit(A) | rate(B) | Amount(A X B) |
| oct 6 | Purchase | 102 | $40 | $4,080 |
| Jul.16 | purchase | 192 | $38 | $7,488 |
| Apr 7 | Purchase | 117 | $36 | $4,212 |
| Total | Cost of goods sold | 411 | $15,780 |
Calculating the Gross margin using the LIFO method:
| Date | Particulars | Units (A) | Rate(B) | amount(A X B) |
| Sales | 411 | $52 | $21,372 | |
| Cost of goods sold | 411 | $15,780 | ||
| Gross margin | $5,592 |
Calculating ending inventory using the LIFO method:
| Date | Particulars | Units(A) | rate(B) | Amount(A XB) |
| Jan 1 | Beginning inventory | 42 | $34 | $1428 |
| Apr 6 | Purchase | 5 | $36 | $180 |
| Total ending inventory | 47 | $40 | $1,880 |
Therefore, the cost of goods sold, gross margin, and ending inventory are calculated at $15,780, $5,592, and $1,880 respectively.
3. Weighted Average Method:
Calculating the cost of goods sold using the weighted average method:
Calculating weighted average rate :
Weighted average=Cost of goods available for saleTotal number of units=$17,388458=$37.9 per unitWeighted average=Cost of goods available for saleTotal number of units=$17,388458=$37.9 per unit
Calculating the Gross margin using the weighted average method:
| Date | Particulars | Units(A) | Rate(B) | amount(A X B) |
| Sales | 411 | $52 | $21,372 | |
| Cost of goods sold | 411 | $37.9 | $15,576.9 | |
| Gross margin | $5,795.1 |
Calculating ending inventory using the Weighted average method:
| Date | Particulars | Units(A) | rate(B) | Amount(A X B) |
| Total ending inventory | 47 | $37.9 | $1,781.3 |
Therefore, the cost of goods sold, gross margin, and the ending inventory is calculated at $15,576.90, $5,795.10, and $1,781.30 respectively as per the weighted average method.