Question

Planet began January with merchandise inventory of 72 crates of vitamins that cost a total of...

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.

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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