Question 9 ABCCompany employs a periodic inventory system and sells its inventor

Question

Question 9

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 9

Explanation / Answer

Operating expenses $ 21,200 Explanation Cost of goods available for sale 5,000 * 9      45,000 4,000 * 11         44,000 2,000 *5           10,000 2,500 *8           20,000 2,000 * 18         36,000 15,500 units       155,000 Ending inventory calculation 5,000 * 9      45,000 3,200 * 11    35,200 8,200 units    80,200 Cost of goods sold = COGAS - E.inv    = 155,000 - 80,200       = 74,800            SalesRevenue                   182,500 (7,300 * 25) COGS    74,800     Gross profit       107,700 Operating exp    21,200 Income beforetaxes           86,500 -Income tax    30,275 NetIncome                       56,225

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