The Gagnon Merchandising Corporation began July operations with merchandise inve

Question

The Gagnon Merchandising Corporation began July operations with merchandise inventory of 10 units, each of which cost $85. During July, Gagnon Merchandising made the following purchases: (1) July 5, 25 units @ $86 per unit, (2) July 16, 15 units @ $88 per unit, (3) July 27, 30 units @ $89 per unit. During July the Company sold the following units at a sales price of $150 per unit: July 7, 18 units, July 21, 10 units, July 28, 29 units. Operating expenses in July were $2,700. The Company estimates its income taxes expense will be approximately 35% of income before taxes. Using the FIFO inventory method, determine the sales dollar amount for July. a. $850 b. $8,550 c. $6,990 d. $6,140 e. $4,943

Explanation / Answer

The correct answer is option (b) i.e. $8,550 which is calculated below:-

Total sales unit = (18+10+29) = 57 units which is sold at the rate of $150 per unit.

Hence, sales dollar amount = $(57*150) =$8,550

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