Question

Sheridan Corporation acquired two inventory items at a lump-sum cost of $113000. The acquisition included 2790 units of product LF, and 5580 units of product 1B. LF normally sells for $30 per unit, and 1B for $10 per unit. If Sheridan sells 930 units of LF, what amount of gross profit should it recognize?

$5300.

$27900.

$1767.

$31620.

On January 1, 2020, the merchandise inventory of Blossom, Inc. was $2100000. During 2020 Blossom purchased $4190000 of merchandise and recorded sales of $5000000. The gross profit rate on these sales was 20%. What is the merchandise inventory of Blossom at December 31, 2020?

$4000000.

$2290000.

$1000000.

$810000.

Answer 1

1
Sales value:
Product LF	83700	=2790*30
Product 1B	55800	=5580*10
Total	139500
Inventory cost allocation:
Product LF	67800	=113000*83700/139500
Product 1B	45200	=113000*55800/139500
Sales revenue	27900	=930*30
Less: Cost of goods sold	22600	=67800*930/2790
Gross Profit	5300
$5300 is correct option
2
Beginning merchandise inventory	2100000
Add: Purchases	4190000
Less: Cost of goods sold	(4000000)	=5000000*(1-20%)
Ending merchandise inventory	2290000
$2290000 is correct option