Question

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

June	Purchas	25 sofas @ $750 each
14	Sal	30 sofas @ $1,150 each
18	Purchas	50 sofas @ $775 each
27	Sal	35 sofas @ $1,200 each

Using the LIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit

Answer 1

>> Cost of Goods available for sale = $ 31,500 + ( 25 * $ 750 ) + ( 50 * $ 775 )

>> Cost of Goods available for sale = $ 89,000.

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>> Ending Inventory = $ 31,500 + ( 10 * $ 750 )

>> Ending Inventory = $ 39,000.

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>> Cost of Goods sold = $ 89,000 - $ 39,000

>> Cost of Goods sold = $ 50,000.

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

>> Sales = $ 76,500.

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>> Gross Profit = Sales - Cost of Goods sold

>> Gross Profit = $ 76,500 - $ 50,000

>> Gross Profit = $ 26,500

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