Weygandt, Accounting Principles, 12e Help I System Announcements (1 Unread) Grac

Question

Weygandt, Accounting Principles, 12e Help I System Announcements (1 Unread) Grace Period: 1 days left I Reqi Aultiple Choice Question 97 rane Industries had ollowing inventory transactions occur during 2014: 2/1/16 Purchase 50 3/14/16 Purchase 88 $40 5/1/16 Purchase 60 $40 $45 The company sold 140 : its at $60 each and has a tax rate of 20%. Assuming that a periodic inventory system is used, what is the company's gross profit sing LIFO? (rounded to whole dollars) $2734 O $2500 O $6130 O $6364 1250 P

Explanation / Answer

Answer is $2500

Explanation

According to LIFO you can begin with the recent date means last date of purchase. So

Let's began with 5/1/16 Purchases 60units *$45=2700

3/14/16 purchases 80 units *$40 = 3200

Cost of goods sold of 140 units(60+80) = $2700+$3200=$5900

Sales = 140 units * $60 = $8400

Gross profit = sales - cost of goods sold

= $8400 - $5900 = $2500

Thank you

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