Question

You have the following information for Blue Spruce Corp.. Blue Spruce Corp. uses the periodic method of accounting for its inventory transactions. Blue Spruce Corp. 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 165 diamonds at a cost of $284 per diamond.
March 3		Purchased 180 diamonds at a cost of $317 each.
March 5		Sold 175 diamonds for $585 each.
March 10		Purchased 332 diamonds at a cost of $379 each.
March 25		Sold 408 diamonds for $609 each.

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

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

Answer 1