Show calculations 29. (25 points) A company\'s inventory records indicate the fo

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Show calculations

29. (25 points) A company's inventory records indicate the following data for the month of April: 1-Apr 5-Apr 9-Apr 14-Apr 20-Apr 30-Apr Beginning Purchase Sale Purchase Sale Purchase 350 units at $18 each 290 units at $20 each 500 units at $55 each 250 units at $22 each 200 units at $55 each 240 units at $25 each If the company uses the first-in, first-out (FIFO) method and the perpetual inventory system, what would be the value of: Cost of Goods Sold? Gross Profit? Ending Inventory?

Explanation / Answer

Company uses FIFO method.

Sale of 500 units is made on April 9.

Out of these 500 units, 350 would be the units that are in the opening stock (April 1) while remaining 150 would be the units from those purchased on April 5.

Next sale was made on April 20 of 200 units.

Out of these 200 units, 140 units would be those that can be purchased on April 5 while remaining 60 units would be those that are purchased on 14 April.

Calculate the Cost of Goods Sold -

Cost of Goods Sold = (350 * $18) + (150 * $20) + (140 * $20) + (60 * $22)

Cost of Goods Sold = $6,300 + $3,000 + $2,800 + $1,320

Cost of Goods Sold = $13,420

The Cost of Goods Sold is $13,420.

Calculate Sales -

Sales = (500 * $55) + (200 * $55) = $27,500 + $11,000 = $38,500

Calculate Gross Profit -

Gross Profit = Sales - Cost of Goods Sold = $38,500 - $13,420 = $25,080

The Gross Profit is $25,080.

190 units have remained from the purchase made on April, 14 and 240 units have been from purchase made on April, 30.

Calculate the Ending Inventory -

Ending Inventory = (190 * $22) + (240 * $25) = $4,180 + $6,000 = $10,180

The Ending Inventory is $10,180.

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