Question

# Modern Lifestyle Furniture began June with merchandise inventory of 45 sofas that cost a total of...

Modern Lifestyle Furniture began June with merchandise inventory of 45 sofas that cost a total of \$31,500. During the month, Modern purchased and sold merchandise on account as follows:

 June 7 Purchase 25 sofas @ \$750 each 14 Sale 30 sofas @ \$1,150 each 18 Purchase 50 sofas @ \$775 each 27 Sale 35 sofas @ \$1,200 each

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.

Beginning inventory cost per sofa = \$31,500 / 45 = \$700

 Date Cost of sofas purchased Cost of sofas sold Ending inventory Beginning inventory 45*\$700 = \$31,500 June 7 25*\$750 = \$18,750 45*\$700 = \$31,500 25*\$750 = \$18,750 June 14 30*\$700 = \$21,000 15*\$700 = \$10,500 25*\$750 = \$18,750 June 18 50*\$775 = \$38,750 15*\$700 = \$10,500 25*\$750 = \$18,750 50*\$775 = \$38,750 June 27 15*\$700 = \$10,500 20*\$750 = \$15,000 5*\$750 = \$3,750 50*\$775 = \$38,750

Sales = (30*\$1,150) + (35*\$1,200)

= \$34,500 + \$42,000

= \$76,500

Cost of goods sold = \$21,000 + \$10,500 + \$15,000 = \$46,500

Ending merchandise inventory = \$3,750 + \$38,750 = \$42,500

Gross profit = Sales - Cost of goods sold

= \$76,500 - \$46,500

= \$30,000