1. Team HomeWork
ProblemE8-19



Salescost ofgross
( $5 per unit)goods soldmargin
Schedule 1$150.00 $124.90 $25,100.00
Schedule 2 150,000129,40020,600
The Computation of cost of goods sold in eachschedule is based on the following
data
Cost Total
Unitsper unitCost
Beginning Iinventory/ Jan/110,000$4,00$40,000
Purchase/ January/108,0004,2033,600
Purchase/ January/306,0004,2525,500
Purchase Frbuary/119,000 4,3038,700
Purchase March/ 1711,000 4,40 48,400
44,00042,32$186,200

43,998



2. ( FIFo and LIFO Effect)


You are vice president of finance of Sandy Alomar Corporation, a retail
Company that prepared two different schedules of gross margin dor the
first quarter ended March,31/2007 These Schedules Appear Below.

SalesCost of Gross
($5 per unit)Goods SoldMargin
Schedule 1$150,000 $124,900 $25,100
Schedule 2150,000129,40020,600
THE Computations of cost of goods sold in each schedule is based on the
following data
cost per Total
units unit Cost
BGN Inventory/ Jan/110,000$ 4,00$40,000
Purchase/ Jan/108,0004,2033,600
Purchase /Jan/306,0004,2525,500
Purchase/Feb/119,0004,3038,700
Purchase/Maech/1711,0004,4048,400

Jane Torville the president of the corporation, cannot understand how two
different gross margins can be computed from the same set of data. As the
vice-precident of finance you have explained to Ms Torville that two schedules
are based on different assumptions concerning the flow of inventory costs,
I e , FIFO and LIFO. Schedules1 and 2 were not necessarily prepared in this
sequence of cost flow assumptions.

Instructions
Prepare two separate schedules computing cost of goods sold and supporting
schedules showing the composition of the ending inventory under both cost flow
assumptions.