Question

You have the following information for Blossom Company. Blossom uses the periodic method of accounting for its inventory transactions. Blossom only carries one brand and size of diamonds—all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost.

March 1		Beginning inventory 140 diamonds at a cost of $300 per diamond.
March 3		Purchased 190 diamonds at a cost of $340 each.
March 5		Sold 180 diamonds for $650 each.
March 10		Purchased 360 diamonds at a cost of $365 each.
March 25		Sold 385 diamonds for $700 each.

Assume that Blossom uses the FIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?

Cost of goods sold		$enter a dollar amount
Gross profit		$enter a dollar amount

Assume that Blossom uses the LIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?

Cost of goods sold		$enter a dollar amount
Gross profit		$enter a dollar amount

Answer 1

	Units	Unit cost	Total
March 1	140	300	42000
March 3	190	340	64600
March 10	360	365	131400
Total	690		238000
Sales units	565	=180+385
Sales value	386500	=(180*650)+(385*700)

1
Cost of goods sold	192375	=(140*300)+(190*340)+(565-140-190)*365
Gross profit	194125	=386500-192375
2
Cost of goods sold	200500	=(360*365)+(190*340)+(565-360-190)*300
Gross profit	186000	=386500-200500