The following information for Dorado Corporation relates to the three-month peri

Question

The following information for Dorado Corporation relates to the three-month period ending September 30 Price per Unit s 48 30 36 Units 485,000 Beginning inventory 47,000 460,000 22,000 Sales Purchases Ending inventory Dorado expects to purchase 210,000 units of inventory in the fourth quarter of the current calendar year at a cost of $37 per unit, and to have on hand 69,000 units of inventory at year-end. Dorado uses the last-in, first-out (LIFO) method to account for inventory costs. a. Determine the cost of goods sold and gross profit amounts Dorado should record for the three months ending September 30. b. Prepare journal entries to reflect these amounts.

Explanation / Answer

Req A: Cost of Goods sold: Beginning Inventory 47000 units @30 1410000 Add: Purchases 460,000 units @ 36 16560000 Less: Ending Inventory 22,000 units @ 30 660000 COGS 17310000 Gross Profits: Sales (485,000 units @ 48) 23280000 Less: COGS 17310000 Gross Profits: 5970000 Req B: JOURNALL ENTRIES: S.no. Accounts Title and Explanations Debit $ Credit $ 1 Merchandise Inventory Dr. 16,560,000      Accounts payable 16,560,000 (for purchase of 460,000 units @$36) 2 Accounts reveivable Dr. 23,280,000     Sales revenue 23,280,000 (for sale recorded) 3 Cost of Goods sold Dr. 17,310,000      Merhandise Inventory 17,310,000

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