Question 3Wario Widgets uses a perpetual inventory system and it uses the FIFO (First-In, First-Out) costing method. It entered into the following purchases and sales transactions for March.DateActivitiesUnits Acquired at CostUnits Sold at Retail PriceMar 1Opening inventory400 units at RM100/unit Mar 5Purchases300 units at RM150/unit Mar 10Sales 600 units at RM500/unitMar 15Purchases400 units at RM180/unit Mar 20Sales 400 units at RM500/unitMar 25Purchases200 units at RM180/unit 100 units at RM170/unit Required:Apply the FIFO costing method to compute the gross profit, the cost of goods purchased, cost of goods sold, and inventory balance for each transaction.

Question
Asked Oct 16, 2019
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Question 3

Wario Widgets uses a perpetual inventory system and it uses the FIFO (First-In, First-Out) costing method. It entered into the following purchases and sales transactions for March.

Date

Activities

Units Acquired at Cost

Units Sold at Retail Price

Mar 1

Opening inventory

400 units at RM100/unit

 

Mar 5

Purchases

300 units at RM150/unit

 

Mar 10

Sales

 

600 units at RM500/unit

Mar 15

Purchases

400 units at RM180/unit

 

Mar 20

Sales

 

400 units at RM500/unit

Mar 25

Purchases

200 units at RM180/unit 100 units at RM170/unit

 

Required:

Apply the FIFO costing method to compute the gross profit, the cost of goods purchased, cost of goods sold, and inventory balance for each transaction.

 

 

 

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Expert Answer

Step 1

FIFO: In First-in-First-Out method, items purchased initially are sold first. So, the value of the ending inventory consist the recent cost for the remaining unsold items.

Perpetual inventory system: The method or system of maintaining, recording, and adjusting the inventory perpetually throughout the year, is referred to as perpetual inventory system.

Step 2

Prepare a perpetual inventory system using FIFO method.

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Image Transcriptionclose

FIFO Method Particulars RECEIVED ISSUED BALANCE Quantity Date Unit-Price Amount Quantity Unit-Price Amount Quantity Unit-Price Amount (RM (RM (RM) (RM) (RM) (RM) March, 1 Opening stock 100 40,000 400 100 40,000 150 45,000 March, 05 Purchases 300 45,000 400 150 300 March, 10 Sales 40,000 30,000 400 100 150 15,000 150 15,000 180 72,000 150 200 100 72,000 March, 15 Purchases 400 180 100 400 March,20 Sales 100 300 15,000 54,000 150 100 100 200 100 18,000 180 180 180 March,25 Purchases 18,000 180 36,000 170이 17,000| $71,000 200 180 36,000 17,000 100 170 Total $170,000 1000 $139,000 400 1,000

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Step 3

Therefore from above calculation cost of goods sold is $139,000 and cost...

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