Question
Furniture began June with merchandise inventory of 47 sofas that cost a total of $ 34310. During the month, Town Furniture purchased and sold merchandise on account as follows:
June 7 Purchase 15 sofas $700 each
June 14 Sale 24 sofas $1,350 each
June 18 Purchase 62 sofas $780 each
June 27 Sale 32 sofas $1,050 each
Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
June 7 Purchase 15 sofas $700 each
June 14 Sale 24 sofas $1,350 each
June 18 Purchase 62 sofas $780 each
June 27 Sale 32 sofas $1,050 each
Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit.
Answers
GPT-4o mini
To prepare a perpetual inventory record using the LIFO (Last In, First Out) inventory costing method for Town Furniture, we’ll track the inventory transactions over the month of June.
### Initial Inventory (June 1)
- **47 sofas** at **$34,310** total (which means $34,310 / 47 sofas = **$730 each**)
1. **June 7**: Purchase 15 sofas at $700 each
- **Inventory after Purchase**:
- 47 sofas at $730 each
- 15 sofas at $700 each
- **Total Inventory**:
- Total Sofas: 47 + 15 = **62 sofas**
- Total Cost: (47 × $730) + (15 × $700) = $34,310 + $10,500 = **$44,810**
2. **June 14**: Sale of 24 sofas at $1350 each using LIFO
- Under LIFO, we sell the most recently purchased sofas first.
- We sell all 15 sofas purchased on June 7 and 9 sofas from the original inventory.
- **Cost of Goods Sold (COGS)**:
- 15 sofas at $700 each = $10,500
- 9 sofas at $730 each = $6,570
- **Total COGS for this sale** = $10,500 + $6,570 = **$17,070**
- **Ending Inventory after Sale**:
- Remaining: 38 sofas
- 38 sofas from the first inventory at $730 each
- Total Inventory: 38 sofas
- Total Cost: 38 × $730 = **$27,740**
3. **June 18**: Purchase 62 sofas at $780 each
- **Inventory after Purchase**:
- 38 sofas at $730 each
- 62 sofas at $780 each
- **Total Inventory**:
- Total Sofas: 38 + 62 = **100 sofas**
- Total Cost: (38 × $730) + (62 × $780) = $27,740 + $48,360 = **$76,100**
4. **June 27**: Sale of 32 sofas at $1,050 each using LIFO
- Again, using LIFO, we sell the most recently purchased sofas first.
- We will sell 32 sofas from the latest purchase on June 18.
- **Cost of Goods Sold (COGS)**:
- 32 sofas at $780 each = $24,960
- **Total COGS for this sale** = **$24,960**
- **Ending Inventory after Sale**:
- Remaining: 100 - 32 = 68 sofas
- 30 sofas from the June 18 purchase at $780 each
- 38 sofas from the first inventory at $730 each
- Total Cost: (30 × $780) + (38 × $730) = $23,400 + $27,740 = **$51,140**
### Summary of Inventory and Financials:
- **Cost of Goods Sold (COGS)**:
- From June 14 sale: $17,070
- From June 27 sale: $24,960
- **Total COGS for the month** = $17,070 + $24,960 = **$42,030**
- **Ending Merchandise Inventory at Month-End**:
- Total ending inventory: $51,140
- **Sales Revenue**:
- From June 14 sale: 24 sofas × $1,350 = $32,400
- From June 27 sale: 32 sofas × $1,050 = $33,600
- **Total Sales Revenue** = $32,400 + $33,600 = **$66,000**
- **Gross Profit**:
- Gross Profit = Sales Revenue - COGS
- Gross Profit = $66,000 - $42,030 = **$23,970**
### Summary:
- **Cost of Goods Sold**: **$42,030**
- **Ending Merchandise Inventory**: **$51,140**
- **Gross Profit**: **$23,970**
### Initial Inventory (June 1)
- **47 sofas** at **$34,310** total (which means $34,310 / 47 sofas = **$730 each**)
1. **June 7**: Purchase 15 sofas at $700 each
- **Inventory after Purchase**:
- 47 sofas at $730 each
- 15 sofas at $700 each
- **Total Inventory**:
- Total Sofas: 47 + 15 = **62 sofas**
- Total Cost: (47 × $730) + (15 × $700) = $34,310 + $10,500 = **$44,810**
2. **June 14**: Sale of 24 sofas at $1350 each using LIFO
- Under LIFO, we sell the most recently purchased sofas first.
- We sell all 15 sofas purchased on June 7 and 9 sofas from the original inventory.
- **Cost of Goods Sold (COGS)**:
- 15 sofas at $700 each = $10,500
- 9 sofas at $730 each = $6,570
- **Total COGS for this sale** = $10,500 + $6,570 = **$17,070**
- **Ending Inventory after Sale**:
- Remaining: 38 sofas
- 38 sofas from the first inventory at $730 each
- Total Inventory: 38 sofas
- Total Cost: 38 × $730 = **$27,740**
3. **June 18**: Purchase 62 sofas at $780 each
- **Inventory after Purchase**:
- 38 sofas at $730 each
- 62 sofas at $780 each
- **Total Inventory**:
- Total Sofas: 38 + 62 = **100 sofas**
- Total Cost: (38 × $730) + (62 × $780) = $27,740 + $48,360 = **$76,100**
4. **June 27**: Sale of 32 sofas at $1,050 each using LIFO
- Again, using LIFO, we sell the most recently purchased sofas first.
- We will sell 32 sofas from the latest purchase on June 18.
- **Cost of Goods Sold (COGS)**:
- 32 sofas at $780 each = $24,960
- **Total COGS for this sale** = **$24,960**
- **Ending Inventory after Sale**:
- Remaining: 100 - 32 = 68 sofas
- 30 sofas from the June 18 purchase at $780 each
- 38 sofas from the first inventory at $730 each
- Total Cost: (30 × $780) + (38 × $730) = $23,400 + $27,740 = **$51,140**
### Summary of Inventory and Financials:
- **Cost of Goods Sold (COGS)**:
- From June 14 sale: $17,070
- From June 27 sale: $24,960
- **Total COGS for the month** = $17,070 + $24,960 = **$42,030**
- **Ending Merchandise Inventory at Month-End**:
- Total ending inventory: $51,140
- **Sales Revenue**:
- From June 14 sale: 24 sofas × $1,350 = $32,400
- From June 27 sale: 32 sofas × $1,050 = $33,600
- **Total Sales Revenue** = $32,400 + $33,600 = **$66,000**
- **Gross Profit**:
- Gross Profit = Sales Revenue - COGS
- Gross Profit = $66,000 - $42,030 = **$23,970**
### Summary:
- **Cost of Goods Sold**: **$42,030**
- **Ending Merchandise Inventory**: **$51,140**
- **Gross Profit**: **$23,970**