Question ABCCompany employs a periodic inventory system and sells its inventoryt
ID: 2458063 • Letter: Q
Question
Question
ABCCompany employs a periodic inventory system and sells its inventoryto customers for $25 per
unit. ABC Company had the following inventory information availablefor the month of May:
May1 Beginning inventory 5,000 units @ $9 cost perunit
May6 Purchased 4,000 units @ $11 cost per unit
May8 Sold 3,000 units
May13 Purchased 2,000 units @ $5 cost per unit
May18 Sold 2,500 units
May21 Purchased 2,500 units @ $8 cost per unit
May28 Sold 1,800 units
May30 Purchased 2,000 units @ $18 cost per unit
Assume ABCCompany uses the LIFO inventory costing method andthat ABC Company's income statement
for May showed an income tax rate of 35%, an income tax expenseamount of $30,275, and a net income
of $56,225.
Calculatethe amount of operating expenses incurred by ABCCompany during May. Do not use decimals
in your answer.
Question
Explanation / Answer
UNIT
UNIT COST
AMOUNT
5000
$9
$45,000
500
$11
$5,500
700
$8
$5,600
2000
$18
$36,000
8200
$92,100
LIFO METHOD(PERIODIC METHOD) Total No. of units available forsale 15500 units No of units sold 7300 units Remaining Inventory 8200 units Ending Inventory on 31mayUNIT
UNIT COST
AMOUNT
5000
$9
$45,000
500
$11
$5,500
700
$8
$5,600
2000
$18
$36,000
8200
$92,100
Total cost of goodsavailable = (5000 X $9) + (4000 X $11) +(2000 X $5) +(2500 X $8) + (2000 X $18 ) = $255,000 Cost of goodssold = Total cost of goods available - EndingInventory = $255000 - $92100 = $162,900 Total sales = 7300 units X $25 = $182,500 Gross Profit = Sales - Cost of goods sold = $182500 - $162900 = $19,600 It seems that informationregarding this problem is insufficient in calculating operatingexpense, just check it once and sendit again. It will be easy to us.Related Questions
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