Question

You have the following information for Sandhill Co.. Sandhill uses the periodic method of accounting for its inventory transactions. Sandhill 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 150 diamonds at a cost of $315 per diamond.
March 3		Purchased 200 diamonds at a cost of $355 each.
March 5		Sold 185 diamonds for $650 each.
March 10		Purchased 330 diamonds at a cost of $380 each.
March 25		Sold 400 diamonds for $700 each.

  

Assume that Sandhill 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
Gross profit

Assume that Sandhill 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
Gross profit

  

Answer 1