Army-navy surplus ltd began march 2011 with 70 tents that, Ask an Expert

Accounting

Army-Navy Surplus Ltd. began March 2011 with 70 tents that cost $20 each. During the month, Army-Navy Surplus made the following purchases at cost:

March 4 100 tents @ $22 = $2,200

March 19 160 tents @ $24 = $3,840

March 25 40 tents @ $25 = $1,000

Army-Navy Surplus sold 320 tents, and at March 31 the ending inventory consists of 50 tents. The sale price of each tent was $45.

Required

1. Determine the cost of goods sold and ending inventory amounts for March under

(a) weighted-average cost and (b) FIFO cost. Round weighted-average cost per unit to four decimal places, and round all other amounts to the nearest dollar.

2. Explain why cost of goods sold is highest under weighted-average cost. Be specific.

3. Prepare Army-Navy Surplus' income statement for March 2011. Report gross profit. Operating expenses totalled $4,000. Army-Navy Surplus uses weighted-average costing for inventory. The income tax rate is 21%.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9798560

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