Mercado Company's inventory transactions inthe fiscal year ended December 31, 2002,follow:BeginningInventoryJan. 10 PurchaseJan. 1Feb. 13 PurchaseJul. 21 Purchase775 units @$52/unitFeb. 15 Sales @600 units @$53/unit225 units @$54/unitAug. 10 Sales @285 units @$55/unitAug. 5 PurchaseMercado Company uses a perpetual inventorysystem. Its inventory had a selling price of $115per unit, and it entered into the followingcurrent-year sales transactions:450 units @$56/unit515 units$115/unit275 units$115/unit Required:1. Compute the cost of goods available forsale and the number of units available forsale2. Compute the number of units in the endinginventory.3. Compute the cost assigned to endinginventory using (a) FIFO; (b) SpecificIdentification; and (c) Weighted-Average.4. Compute the gross profit earned by thecompany for each of the costing methodsin part 3.Analysis Component5. If Mercado Company's manager earns abonus based on a percentage of grossprofit, which method of inventory costingwill the manager likely prefer?

Date Particulars Units Purchase price ($) cost of goods ($) a b c d e = c x d Jan-01 Opening…

Required: 1. Compute the cost of goods available for sale and the number of units available for sale 2. Compute the number of units in the ending inventory. 3. Compute the cost assigned to ending inventory using (a) FIFO; (b) Specific Identification; and (c) Weighted-Average. 4. Compute the gross profit earned by the company for each of the costing methods in part 3. Analysis Component 5. If Mercado Company's manager earns a bonus based on a percentage of gross profit, which method of inventory costing will the manager likely prefer?

Required: 1. Compute the cost of goods available for sale and the number of units available for sale 2. Compute the number of units in the ending inventory. 3. Compute the cost assigned to ending inventory using (a) FIFO; (b) Specific Identification; and (c) Weighted-Average. 4. Compute the gross profit earned by the company for each of the costing methods in part 3. Analysis Component 5. If Mercado Company's manager earns a bonus based on a percentage of gross profit, which method of inventory costing will the manager likely prefer?

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter11: Work Sheet And Adjusting Entries

Section: Chapter Questions

Problem 3E: Basga Company uses the periodic inventory system. Beginning inventory amounted to 241,072. A...

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