Reference no: EM13753027
Tech Supply Co. is a mass distributor of microchips. Although there are several types of microchips in the market, Tech Supply Co. only buys and sells one kind. Tech Supply Co. also only sells to a very limited number of buyers and has never had any problem collecting what is owed to them. Tech Supply uses the perpetual weighted average method to track inventory costs during the year, but converts that number to a periodic LIFO value at the end of each quarter. Tech Supply Co. entered into the following transactions during the first quarter of 2015:
January 1: Beginning inventory for the year is 500 microchips. The average cost is $155 per unit. The LIFO reserve is $2,500.
January 15: Purchased 250 microchips at $148 each with cash.
February 5: Sold 190 microchips for $350 each on account.
February 14: Purchased 100 microchips for $146 each on account.
February 17: Settled the sale from February 5 th .
February 19: Sold 150 microchips for $340 each for cash.
March 1: Purchased 75 microchips for $145 each on account.
March 10: Settled the purchase from February 14th .
March 25: Sold 250 microchips for $325 each for cash.
Required: 1. Prepare the entries to record the inventory transactions listed above under the perpetual weighted average inventory method. Round all costs per unit to the nearest cent.
a. What is the cost of goods sold for the first quarter and ending inventory at 3/31/15.
2. Calculate the ending inventory and the cost of goods sold under the periodic LIFO method for the first quarter of 2015.
3. What is the LIFO reserve at 3/31/15? 4. Would you recommend that Tech Supply switch inventory methods? Why?
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