Question

ABC Company employs a periodic inventory system and sells
its inventory to customers for $23 per unit. ABC Company
had the following inventory information available for the
month of May:

May 1    Beginning inventory 1,600 units @ $12 cost per unit
May 8    Sold 1,100 units
May 13   Purchased 1,700 units @ $24 cost per unit
May 18   Sold 1,000 units
May 21   Purchased 1,500 units @ $18 cost per unit
May 28   Sold 800 units
May 30   Purchased 1,200 units @ $20 cost per unit

During May, ABC Company reported operating expenses of
$5,000 and had an income tax rate of 36%.

Calculate the amount of gross profit earned by ABC Company
during May using the weighted average method.

Answer 1

Statement of Profit or Loss

Sales 66,700.00

Total Revenue (A)   66,700.00

Purchase 91,800.00

Change in Operating Revenue (41,763.64)

Operating Cost 5000.00

Total Cost (B)    55,036.36

Gross Profit (A) - (B) = (C)       11,663.64   

(-) Tax Expense at 36 %   4,189.91

Net Profit   7,464.73   

Note :

1. Average Cost Method of Inventory Valuation.

Date	Opening Inventory	Purchase	Sale	Closing Inventory
Units	Rs	Total	Units	Rs	Total	Units	Rs	Total	Units	Rs	Total
May-01	1600	12.00	19,200.00	-	-	-	-	-	-	1600	12.00	19,200.00
May-08	1600	12.00	19,200.00	-	-	-	1100	12.00	13,200.00	500	12.00	6,000.00
May-13	500	12.00	6,000.00	1700	24.00	40,800.00	-	-	-	2200	21.27	46,800.00
May-18	2200	21.27	46,800.00	-	-	-	1000	21.27	21,272.73	1200	21.27	25,527.27
May-21	1200	21.27	25,527.27	1500	18.00	27,000.00	-	-	-	2700	19.45	52,527.27
May-28	2700	19.45	52,527.27	-	-	-	800	19.45	15,563.64	1900	19.45	36,963.64
May-30	1900	19.45	36,963.64	1200	20.00	24,000.00	-	-	-	3100	19.67	60,963.64
						91,800.00			50,036.36			T

Total Sales = 2900 units * 23 = $ 66,700

Total Purchase = $ 91,800