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Chapter 6: Q28PGA_2 (page 367)

Fit Gym began January with merchandise inventory of 78 crates of vitamins that cost a total of \(4,290. During the month, Fit Gym purchased and sold merchandise on account as follows:

Jan. 5 Purchase 156 crates @ \) 64 each

13 Sale 180 crates @ \( 100 each

18 Purchase 114 crates @ \) 75 each

26 Sale 150 crates @ $ 116 each

Requirements

2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company鈥檚 cost of goods sold, ending merchandise inventory, and gross profit.

Short Answer

Expert verified

Cost of goods sold: $21,834

Ending Inventory: $990

Gross Profit: $13,566

Step by step solution

01

Step-by-Step Solution

Step 1: Perpetual inventory table under the LIFO method


Purchases
Cost of goods sold
Inventory on hand

Date

Qty

Unit cost

Total Cost

Qty

Unit cost

Total Cost

Qty

Unit Cost

Total Cost

Jan 1.

78

$55

$4,290

Jan 5.

156

$64

$9,984

78

156

$55

$64

$14,274

Jan 13

156

24

$64

$55

$11,304

54

$55

$2,970

Jan 18

114

$75

$8,550

54

114

$55

$75

$11,520

Jan 26

114

36

$75

$55

$10,530

18

$55

$990

Total

270

$18,534

330

$21,834

18

$55

$990

02

Computation of gross profit

TotalRevenue=Salevalueof13thJan+Salevalueof26thJan=180脳$100+150脳$116=$18,000+$17,400=$35,400

GrossProfit=Totalrevenue-Costofgoodssold=$35,400-$21,834=$13,566

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Most popular questions from this chapter

Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 \) 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

6. If the business wanted to maximize gross profit, which method would it select?

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Requirements

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Requirements

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Requirements

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