HW Unit 2 Week 5

Due Jul 18, 2022 by 11:59pm
Points 48
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Available Jul 8, 2022 at 11am - Jul 18, 2022 at 11:59pm

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Accounting for Merchandising and Inventory

You are busy establishing both divisions of your business (catering and mixer sales) and completing your business degree. Your goals for the next 11 months are to sell one mixer per month and to hold two to three catering events per week.

The cost of mixers is expected to increase. You have just negotiated new terms with Esquiver that include shipping costs in the negotiated purchase price (mixers will be shipped FOB destination). Assume that you decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory.

The following transactions occur in February to May 2022.

Feb. 2 You buy two mixers on account from Esquiver Supply Co. for $1,200 ($600 each), FOB destination, terms n/30.

16 You sell one mixer for $1,150 cash.

25 You pay the amount owed to Esquiver.

Mar. 2 You buy one mixer on account from Esquiver Supply Co. for $618, FOB destination, terms n/30.

30 You sell two mixers for a total of $2,300 cash.

31 You pay the amount owed to Esquiver.

Apr. 1 You buy two mixers on account from Esquiver Supply Co. for $1,224 ($612 each), FOB destination, terms n/30.

13 You sell three mixers for a total of $3,450 cash.

30 You pay the amounts owed to Esquiver.

May 4 You buy three mixers on account from Esquiver Supply Co. for $1,875 ($625 each), FOB destination, terms n/30.

27 You sell one mixer for $1,150 cash.

Required part C

Showing all your calculations:

1. Determine the cost of goods available for sale. Recall that at the end of January, you had three mixers on hand at a cost of $595 each.
2. Calculate the ending inventory under the LIFO, FIFO, and average cost methods,
3. Calculate the cost of goods sold under the LIFO, FIFO, and average cost methods,
4. Calculate the gross profit under the LIFO, FIFO, and average cost methods, and
5. Calculate the gross profit rate under the LIFO, FIFO, and average cost methods.

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