Question

Planet began January with merchandise inventory of 72 crates of vitamins that cost a total of KD 3,600.

During the​ month, purchased and sold merchandise on account as​ follows:

Jan. 5   Purchase 120 crates @ KD 78 each

Jan. 13   Sale 130 crates @ KD 96 each

Jan. 18   Purchase 124 crates @ KD 90 each

Jan. 26 Sale 130 crates @ KD 104 each

Requirement:

Prepare a perpetual inventory​ record, using the FIFO inventory costing​ method, and determine the​ company's cost of goods​ sold, ending merchandise​ inventory, and gross profit.

Answer 1

Solution :

Inventory Record :

Date	Purchases			Cost of Goods Sold			Ending Inventory
	Qty.	Price	Total Cost	Qty	Price	Total Cost	Qty.	Price	Total Cost
Jan 1							72	KD 50	KD 3,600
Jan 15	120	KD 78	KD 9,360				72	KD 50	KD 3,600
							120	KD 78	KD 9,360
Jan 13				72	KD 50	KD 3,600
				58	KD 78	KD 4,524	62	KD 78	KD 4,836
Jan 18	124	KD 90	KD 11,160				62	KD 78	KD 4,836
							124	KD 90	KD 11,160
Jan 26				62	KD 78	KD 4,836
				68	KD 90	KD 6,120	56	KD 90	KD 5,040
Total	244		20,520	260		KD 19,080	56		KD 5,040

Cost of Goods Sold = KD 19,080

Ending Inentory = KD 5,040

Gross Profit :

Sales ( 130 * KD 96) + ( 130 * KD 104)	KD 26,000
Less : Cost of Goods Sold	KD 19,080
Gross Profit	KD 6,920

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