Exercise 6-4 Calculate inventory amounts when costs are rising (LO3)
[The following information applies to the questions displayed below.]| During 2015, TRC Corporation has the following inventory transactions. |
| Date | Transaction | Number of Units | Unit Cost | Total Cost | |
| Jan. 1 | Beginning inventory | 48 | $ 40 | $ | 1,920 |
| Apr. 7 | Purchase | 128 | 42 | 5,376 | |
| Jul. 16 | Purchase | 198 | 45 | 8,910 | |
| Oct. 6 | Purchase | 108 | 46 | 4,968 | |
| 482 | $ | 21,174 | |||
For the entire year, the company sells 427 units of inventory for $58 each.
| Required: | |
| 1. | Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit. |
Explanation:
1.| Date | Transaction | Number of Units | Unit Cost | Ending Inventory |
| Oct. 6 | Purchase | 55 | $ 46 | $ 2,530 |
| Date | Transaction | Number of Units | Unit Cost | Cost of Goods Sold | |
| Jan. 1 | Beginning inventory | 48 | $ 40 | $ | 1,920 |
| Apr. 7 | Purchase | 128 | 42 | 5,376 | |
| Jul. 16 | Purchase | 198 | 45 | 8,910 | |
| Oct. 6 | Purchase | 53 | 46 | 2,438 | |
| 427* | $ | 18,644 | |||
*First 427 units purchased are assumed sold
| Sales revenue = 427 units × $58 = $24,766 |
| Gross profit | = Sales revenue − Cost of goods sold |
| = $24,766 − $18,644 = $6,122 |
Exercise 6-4 Part 2
| 2. | Using LIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit. |
Explanation:
2.| Date | Transaction | Number of Units | Unit Cost | Ending Inventory |
| Jan. 1 | Beginning Inventory | 48 | $ 40 | $ 1,920 |
| Apr. 07 | 7 | $42 | $294 | |
| 55 | $ 2,214 | |||
| Date | Transaction | Number of Units | Unit Cost | Cost of Goods Sold |
| Apr. 7 | Purchase | 121 | $ 42 | $ 5,082 |
| Jul. 16 | Purchase | 198 | 45 | 8,910 |
| Oct. 6 | Purchase | 108 | 46 | 4,968 |
| 427* | $ 18,960 | |||
* Last 427 units purchased are assumed sold
| Sales revenue = 427 units × $58 = $24,766 |
| Gross profit | = Sales revenue – Cost of goods sold |
| = $24,766 ? $18,960 = $5,806 |
Exercise 6-4 Part 3
| 3. | Using weighted-average cost, calculate ending inventory, cost of goods sold, sales revenue, and gross profit. (Round your average cost per unit to 4 decimal places.)  Explanation: 3.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||