The Divine Merchandising Corporation began March operations with merchandise inv

Question

The Divine Merchandising Corporation began March operations with merchandise inventory of 6 units, each of which cost $27. During March, Divine Merchandising made the following purchases: (1) March 4, 12 units @ $28 per unit, (2) March 15, 18 units @ $30 per unit, (3) March 26, 14 units @ $32 per unit. During March the Divine Merchandising Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, and March 28, 12 units. Operating expenses in March were $640. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the FIFO inventory method, determine the net income for March. Roound your answer to the nearest whole dollar.

$114

$1,920

$754

$40

$74

a.

$114

b.

$1,920

c.

$754

d.

$40

e.

$74

Explanation / Answer

Solution.

Date Particular Unit Rate Total Sale unit Balance unit Cost of sale 1-Mar opening 6 27 162 6 0 162 4-Mar Purchase 12 28 336 12 0 336 15-Mar Purchase 18 30 540 18 0 540 26-Mar Purchase 14 32 448 4 10 128 Total 50 1486 40 10 1166 6-Mar Sale 11 48 528 20-Mar Sale 17 48 816 28-Mar Sale 12 48 576 Total 40 1920

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