Mercer Inc. is a retailer operating in British Columbia. Mercer uses the perpetual inventory method. All sales returns from customers result in the goods being returned to inventory; the inventory is not damaged. Assume that there are no credit transactions; all amounts are settled in cash. You are provided with the following information for Mercer Inc. for the month of January 2014.

Date Description Quantity Unit Cost

Jan 1 Beginning inventory 280 $14

Jan 5 Purchase 392 $17

Jan 8 Sale 308 $28

Jan 10 Sale return 28 $28

Jan 15 Purchase 154 $20

Jan 16 Purchase return 14 $20

Jan 20 Sale 252 $31

Jan 25 Purchase 56 $22

a. Calculate the Moving-average cost per unit at January 1, 5, 8, 15, 20, & 25.

b. For each of the following cost flow assumptions, calculate cost of goods sold, ending inventory, and gross profit. (1) LIFO. (2) FIFO. (3) Moving-average cost.

Date Description Quantity Unit Cost Total Cost

Jan 1 Beginning inventory 280 $14 $ 3920

Jan 5 Purchase 392 $17 $ 6644

Jan 8 Sale 308 $28 $ 8624

Jan 10 Sale return 28 $28 $ 784

Jan 15 Purchase 154 $20 $ 3080

Jan 16 Purchase return 14 $20 $ 280

Jan 20 Sale 252 $31 $ 7812

Jan 25 Purchase 56 $22 $ 1232

Total Units 868 at $ 14596

Average Cost = $ 16.82

Moving Average Cost Method

Date Description Quantity Unit Cost Balance

Jan 1 Beginning inventory 280 $14 $ 3920

Jan 5 Purchase 392 $17 $ 6644

Units 672 $ 10564 15.72

Jan 8 Sale 308 $28 $ 8624

Units 364 15.72 5722.17

Jan 10 Sale return 28 $28 $ 784

Jan 15 Purchase 154 $20 $3080

Units 546 9586.17 17.55

Jan 16 Purchase return 14 $20 $280

Jan 20 Sale 252 $31 $7812

Units 280 17.55 4914

Jan 25 Purchase 56 $22 $1232

Units 336 6146 $ 18.29

Moving-average cost Ending Inventory = $ 6164

Ending Units 336

FIFO Ending Inventory = $ 6454

56 units at $22 = $ 1232

154 units at $20 = $ 3080

126 units at $17 = $ 2142

LIFO Ending Inventory = $ 4872

280 units at $14 = $ 3920

56 units at $17 = $ 952

Gross Profit Inventory = $ 16.82 * 336 = $ 5651.52

Moving Average Cost = 336 * 18.29 = $ 6146

FIFO Cost of Goods Sold = Total Sales - Ending Inventory FIFO

=8624-784 + 7812 - 6454

=15652 - 6454 = $ 9198

LIFO Cost of Goods Sold = Total Sales - Ending Inventory LIFO

= 15652 - 4872=$ 10780

Gross Profit Cost of Goods Sold = Total Sales - Ending Inventory Gross Profit = 15652 - 5651.52 = $ 10,000.48

Moving-average cost Cost of Goods Sold = Sales - Ending Inventory=

15652-$ 6164 = $ 9488

Gross Profit:

1) LIFO = 4872

2) FIFO = 6454

3) Moving Average 6164