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In: Accounting

Units Cost/unit Feb. 1, 2017 Purchase 86 $36 Mar. 14, 2017 Purchase 149 $38 May 1,...

Units Cost/unit
Feb. 1, 2017 Purchase 86 $36
Mar. 14, 2017 Purchase 149 $38
May 1, 2017 Purchase 106 $39


The company sold 245 units at $50 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using LIFO? (rounded to whole dollars)

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Expert Solution

Periodic Inventory System: LIFO

Date Number of Units Purchased Cost per Unit Purchase Cost Number of Units Sold Cost per Unit Cost of Goods Sold Number of Units Balance Cost per Unit Inventory Balance
Feb 1, 2017 86 $ 36.00 $   3,096.00 86 $ 36.00 $ 3,096.00
Mar 14, 2017 149 $ 38.00 $   5,662.00 86 $ 36.00 $ 3,096.00
149 $ 38.00 $ 5,662.00
May 1, 2017 106 $ 39.00 $   4,134.00 86 $ 36.00 $ 3,096.00
149 $ 38.00 $ 5,662.00
106 $ 39.00 $ 4,134.00
106 $ 39.00 $   4,134.0 86 $ 36.00 $ 3,096.00
139 $ 38.00 $   5,282.0 10 $ 38.00 $     380.00
Total 341 $ 12,892.00 245 $   9,416.0             96 $ 3,476.00

Gross Profit = Total Sales - Cost of goods sold

= $ 12,250 - $ 9,416

= $ 2834

Thus, Company's Gross Profit using LIFO (Periodic Inventory System) is $ 2834.

Total Sales = Sold units * Selling price per unit

= 245 * $ 50

= $ 12,250

Note: Tax effect ignored as it will considered while calculation of Net Profit Margin. Tax is not considered for calculation of Gross Profit.

ekkarill92 answered 1 year ago
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