PRINCIPLES OF ACCOUNTING I – CHAPTER 5 EXERCISE

Harry’s House of Fashions
uses a perpetual inventory system. It entered into the following calendar-year 2013 purchases and sales
transactions:

Jan. 1 Beginning inventory 60 units
@ $40/unit
April 1 Purchase 75 units @ $48/unit
April 5 Sales
50 units @
$80/unit
July 7 Purchase 30 units @
$42/unit
Aug.12 Purchase 40 units @
$50/unit
Sept. 2 Sales
65 units @
$80/unit
Totals
205units 115 units

Required

1. Compute cost of goods
available for sale and the number of units available for sale.
2. Compute the number of
units remaining in ending inventory.
3. Compute the cost of
goods sold for the year and the cost assigned to ending inventory using (a)
FIFO, (b) LIFO, and
(c) weighted average –
round per unit cost to tenth of a cent and inventory balances to the dollar.
4. Compute the gross
profit earned by the company for each of the costing methods in part 3.

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