Using LIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

Exercise 6-4A Calculate inventory amounts when costs are rising (LO6-3)

During the year, TRC Corporation has the following inventory transactions.

Date		Transaction	Number of Units		Unit Cost		Total Cost
Jan.	1	Beginning inventory		52	$	44		$	2,288
Apr.	7	Purchase		132		46			6,072
Jul.	16	Purchase		202		49			9,898
Oct.	6	Purchase		112		50			5,600
				498				$	23,858

For the entire year, the company sells 432 units of inventory for $62 each.

Exercise 6-4A Part 2

2. Using LIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

Solutions

Expert Solution

Ending inventory=Beginning inventory+Purchases-Sales

=(52+132+202+112-432)

=66 units

As per LIFO;cost of goods sold=(112 units@$50)+(202 units@$49)+(118 units@$46)

=$20926

Ending inventory=(14 units@$46)+(52 units@$44)

=$2932

Sales revenue=432*62

=$26784

Gross profit=Sales-Cost of goods sold

=$26784-20926

=$5858

NOTE:As per LIFO;goods purchased last are sold off first.Hence 432 units sold would consist of 112 units of Oct 6 purchases;202 units of July 16 purchases and the balance=(432-112-202)=118 units of Apr 7

Hence ending inventory would consist of (132-118)=14 units of Apr 7 and 52 units of beginning inventory.

ekkarill92 answered 1 year ago

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