Q33PGB_3 - Horngren'S Financial And Managerial Accounting

Question

Exercise World began January with merchandise inventory of 90 crates of vitamins that cost a total of \(5,850. During the month, Exercise World purchased and soldmerchandise on account as follows:

Jan. 2 Purchase 130 crates @ \) 76 each

5 Sale 140 crates @ \( 100 each

16 Purchase 170 crates @ \) 86 each

27 Sale 180 crates @ $ 104 each

Requirements

3. Prepare a perpetual inventory record, using the weighted-average inventory costingmethod, and determine the company’s cost of goods sold, ending merchandiseinventory, and gross profit. (Round weighted-average cost per unit to the nearestcent and all other amounts to the nearest dollar.)

Step-by-Step Solution

Answer

Cost of goods sold: $24,840

Ending Inventory: $5,740

Gross Profit: $7,880

Step 1: Perpetual inventory table under the weighted average method

Step 2: Computation of gross profit

$$\begin{gathered} \mathbf{Total}\mathbf{ }\mathbf{Revenue}\mathbf{=}\mathbf{Sale}\mathbf{ }\mathbf{valueof}\mathbf{ }\mathbf{5}\mathbf{th}\mathbf{ }\mathbf{Jan}\mathbf{ }\mathbf{+}\mathbf{ }\mathbf{Sale}\mathbf{ }\mathbf{value}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{27}\mathbf{th}\mathbf{ }\mathbf{Jan} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{(}\mathbf{140}\mathbf{\times }\mathbf{\$}\mathbf{100}\mathbf{)}\mathbf{+}\mathbf{(}\mathbf{180}\mathbf{\times }\mathbf{\$}\mathbf{104}\mathbf{)} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{14}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{18720} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{32}\mathbf{,}\mathbf{720} \\ \mathbf{Gross}\mathbf{ }\mathbf{Profit}\mathbf{=}\mathbf{Total}\mathbf{ }\mathbf{Revenue}\mathbf{‐}\mathbf{Cost}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{goods}\mathbf{ }\mathbf{sold}\mathbf{ } \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{32}\mathbf{,}\mathbf{720}\mathbf{‐}\mathbf{\$}\mathbf{24}\mathbf{,}\mathbf{840} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{7}\mathbf{,}\mathbf{880} \end{gathered}$$