FATIMA JINNAH WOMEN UNIVERSITY
Assignment
Accounting for Inventory
Subject
Accounting II
Submitted to
Miss Ammara Mubashar
Submitted by
Mishal Fatima
2019-BBA-050
Date of submission
Jan 10, 2022
Question:
Yam-Hash Company reported the following current-year data for its only
product:
Jan. 1 Beginning Inventory 200 Units @ Rs.10
Mar. 14 Purchase 350 Units @ Rs.15
Jul. 30 Purchase 450 Units @ Rs.20
Oct. 26 Purchase 700 Units @ Rs.25
Yam-Hash resold its products at Rs.40 per unit on the following dates:
Jan. 10 Sales 100 units
Mar. 15 Sales 150 units
Oct. 5 Sales 310 units
Total Sales 560 units
1. Determine the costs assigned to cost of goods sold and ending inventory using
a. FIFO
b. LIFO
c. Weighted Average Cost Method
2. Also pass necessary journal entries and compare gross profits of all 3 methods.
SOLUTION:
FIFO (First In First Out)
Date Purchase COGS Balance Journal Entry
Jan 1 Beginning 200unit@10
Inventory
Jan 10 100unit@10=1000 100unit@10 Accounts receivable 4000
Sales 4000
Cogs 1000
Inventory 1000
Mar 14 350unit@15 100unit@10 Inventory 5250
350unit@15 Accounts payable 5250
Mar 15 100unit@10=1000 300unit@15 A/R 6000
50unit@15=750 Sales 6000
Cogs 1750
Inventory 1750
Jul 30 450unit@20 300unit@15 Inventory 9000
450unit@20 A/P 9000
Oct 5 300unit@15=4500 440unit@20 A/R 12400
10unit@20=200 Sales 12400
Cogs 4700
Inventory 4700
Oct 26 700unit@25 440unit@20=8800 Inventory 17500
700unit@25=17500 A/P 17500
26300
Total Cost of goods sold= 7450
Inventory balance= 26300
Total sales 560@40= 22400
Gross profit= sales-Cogs= 22400-7450
Gross profit = 14950
LIFO (Last In First Out)
Date Purchase COGS Balance Journal Entry
Jan 1 Beginning Inventory 200unit@10
10 100unit@10=1000 100unit@10 Accounts receivable 4000
Sales 4000
Cogs 1000
Inventory 1000
Mar 350unit@15 100unit@10 Inventory 5250
14 350unit@15 Accounts payable 5250
150unit@15=2250 100unit@10 A/R 6000
15 200unit@15 Sales 6000
Cogs 1500
Inventory 1500
Jul 30 450unit@20 100unit@10 Inventory 9000
200unit@15 A/P 9000
450unit@20
Oct 5 310unit@20=6200 100unit@10 A/R 12400
200unit@15 Sales 12400
140unit@20 Cogs 6200
Inventory 6200
26 100unit@10=1000 Inventory 17500
200unit@15=3000 A/P 17500
140unit@20=2800
700unit@25=17500
24300
Total cost of goods Sold= 9450
Inventory balance= 24300
Total sales 560unit@40=22400
Gross profit= sales-cogs= 22400-9450 = 12950
Weighted Average
Date Purchase Cogs Balance Journal entry
Jan 1 Beginning 200unit@10
Inventory
Jan 100unit@10=100 100unit@10 Account receivable 4000
10 0 Sales 4000
Cogs 1000
Inventory 1000
Mar 350unit@15 100unit@10=1000 Inventory 5250
14 350unit@15=5250 Accounts payable 5250
6250/450=13.889
Mar
[email protected] [email protected] A/R 6000
15 = 2083.35 Sales 6000
Cogs 2083.35
Inventory 2083.35
Jul 450unit@20
[email protected] Inventory 9000
30 450unit@20 A/P 9000
13166.7/750=17.556
=5442.36 Sales 12400
Cogs 5442.36
Inventory 5442.36
Oct 700unit@25
[email protected]=7724.64 Inventory 17500
26 700unit@25=17500 A/P 17500
25224.64
Total cost of goods sold=8525.71
Inventory balance= 25224.64
Sales= 560unit@40=22400
Gross profit= sales-cogs= 22400-8525.71= 13874.29
GROSS PROFIT COMPARISON
FIFO LIFO Weighted Average
14950 12950 13874.29
………………………………………………….
