Question

You have the following information for Sheffield Corp.. Sheffield uses the periodic method of accounting for its inventory transactions. Sheffield 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 141 diamonds at a cost of $285 per diamond.
March 3		Purchased 207 diamonds at a cost of $365 each.
March 5		Sold 166 diamonds for $570 each.
March 10		Purchased 328 diamonds at a cost of $376 each.
March 25		Sold 386 diamonds for $705 each.

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

Answer 1

	FIFO	Cost of goods available for sale	Cost of Goods Sold		Ending Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
Mar-01	Beginning Inventory	141	$ 285.00	$      40,185.00	141	$ 285.00	$     40,185.00
Mar-03	Purchase	207	$ 365.00	$      75,555.00	207	$ 365.00	$     75,555.00
Mar-10	Purchase	328	$ 376.00	$ 1,23,328.00	204	$ 376.00	$     76,704.00	124	$ 376.00	$        46,624.00
	Total	676		$ 2,39,068.00	552		$ 1,92,444.00	124		$        46,624.00

Sales Revenue	$    3,66,750
Cost of Goods Sold	$    1,92,444
Gross Profit	$   1,74,306