Kinney Company uses a periodic inventory system. At the end of the annual accoun
ID: 2589906 • Letter: K
Question
Kinney Company uses a periodic inventory system. At the end of the annual accounting period, December 31, 2006, the accounting records provided the following information for product A:
Date
Description
Units .
Unit Cost
01/01/2006
Beginning Inventory
3,000
$6
03/21/2006
Purchase
2,500
$7
08/15/2006
Purchase
4,000
$8
During 2006, the company sold 5,000 units of product A for $20 each.
Part A Compute costs of goods sold under FIFO inventory costing method.
Part B Compute gross profit under FIFO inventory costing method.
Date
Description
Units .
Unit Cost
01/01/2006
Beginning Inventory
3,000
$6
03/21/2006
Purchase
2,500
$7
08/15/2006
Purchase
4,000
$8
Explanation / Answer
A Costs of goods sold = (3000*6)+(2000*7)= 32000 B Gross Profit = (5000*20)-32000= 68000
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