Acc225 Fundamental Accounting Principles: P6-1A Parker Company uses a perpetual inventory system

Acc225 Fundamental Accounting Principles

P6-1A
Parker Company uses a perpetual inventory system. It entered into the following calendar year 2011 purchases and sales transactions.
Date Activities Units Acquired at Cost Units Sold at Retail
1-Jan Beginning inventory 600 units @ $44/unit
10-Feb Purchase 200 units @ $40/unit
13-Mar Purchase 100 units @ $20/unit
15-Mar Sales 400 units @ $75/unit
21-Aug Purchase 160 units @ $60/unit
5-Sep Purchase 280 units @ $48/unit
10-Sep Sales 200 units @ $75/unit
Totals 1,340 units 600 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. specific identification- units sold consist of 500 units from beginning inventory and 100 units from the march 13 purchase, and d. weighted average. Round per unit costs to three decimals, but inventory balances to the dollar.
4. Compute gross profit earned by the company for each of the four costing methods in part 3.
Analysis Component:
5. If the company's manager earns a bonus based on a percent of gross profit, which method of inventory costing will the manager likely prefer?
Powered by