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    Inventory calculations

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    You have the following information for Benton Inc. for the month ended October 31, 2007. Benton uses a periodic method for inventory.

    Date Description Units Unit Cost or Selling Price

    Oct 1 Beginning Inventory 60 $25
    Oct 9 Purchase 120 27
    Oct 11 Sale 100 35
    Oct 17 Purchase 90 28
    Oct 22 Sale 60 40
    Oct 25 Purchase 80 29
    Oct 29 Sale 120 40

    Instructions

    (a) Calculate (i) ending inventory, (ii) costs of goods sold, (iii)gross profit, and (iv) gross profit rate under each of the following methods.
    (1) LIFO
    (2) FIFO
    (3) Average cost. (Round cost per unit to three decimal places.)

    (b) Compare results for the three cost flow assumpitions.

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    Solution Preview

    (a) Total cost of goods available for sale are 60 X 25 + 120 X 27 + 90 X 28 + 80 X 29 = $9,580
    Total units available for sale = 60+120+90+80 = 350
    Units sold = 100+60+120 = 280
    Units in ending inventory = 350-280 = 70
    Total sales = 100 X 35 + 60X40 + 120 X 40 = $10,700
    (1) LIFO - In LIFO the latest units are assumed to be sold first. The ending inventory will consist of the earliest units. The ending ...

    Solution Summary

    The solution explains how to calculate ending inventory, CGS, gross profit using LIFO, FIFO, Average cost methods

    $2.19

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