Use a perpetual inventory system and a LIFO costing method for ABC Company, a re
ID: 2435033 • Letter: U
Question
Use a perpetual inventory system and a LIFO costing method for ABC Company, a retailer.On July 2, 2007, ABC purchased 100 Reliable tires at $25 each. the purchase was made on account, and the tires were purchased as merchandise inventory.
On July 3, 2007, ABC decided to have an "After the 4th Sale". Therefore, ABC purchased on account another 300 Reliable tires at $27 each.
On July 5, 2007 ABC sold 160 tires for cash. The sale prices for each tire was $50. USE THE LIFO METHOD.
On July 6, 2007, ABC sold 200 tires for cash. The sale price for each tire was $50.
Calculate the following balances after the 6th of July sale:
Sales Revenue:
Cost of Merchandise Sold:
Gross Profit:
Number of Reliable Tires in inventory:
Inventory Balance (dollars) for Reliable Tires:
Explanation / Answer
Calculate the following balances after the July 6th sale:
Sales Revenue: 360 x 50 = $18,000
Cost of Merchandise Sold: (300 x 27) + (60 x 25) = $9,600
Gross Profit: 18,000 - 9,600 = $8,400
Number of Reliable Tires in inventory: 400 - 360 = 40
Inventory Balance (dollars) for Reliable Tires: 40 x 25 = $1,000
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