Question

The following information for Dorado Corporation relates to the three-month period ending September 30. Units Price per Unit Sales 455,000 $ 42 Beginning inventory 41,000 24 Purchases 430,000 30 Ending inventory 16,000 ? Dorado expects to purchase 180,000 units of inventory in the fourth quarter of the current calendar year at a cost of $31 per unit, and to have on hand 57,000 units of inventory at year-end. Dorado uses the last-in, first-out (LIFO) method to account for inventory costs.

A)Determine the cost of goods sold and gross profit amounts Dorado should record for the three months ending September 30.

B) Prepare journal entries to reflect these amounts.

Answer 1

COST OF GOODS AVAILABLE FOR SALE:
Beginning Inventory (41000 units @24)				984000
Add: Purchases (430000 units @30)				12,900,000
Total cost of Goods available for sale				13,884,000
Less: Ending Inventory				384000
(16,000 units @24)
Cost of goods sold				13,500,000
Sales (455,000 units @$42)				19,110,000
Less: COGS				13,500,000
Gross Profit				5,610,000
Jurnal entries:
Purchases Account Dr.			12,900,000
Accounts payable				12,900,000
Accounts recievable Dr.			19,110,000
Sales revenue				19,110,000
Mercchandise Inventory Dr.			12,900,000
Purchases Account				12,900,000
(for closing the purchases account)
Cost of Goods sold Dr.			13,500,000
Merchandise inventory				13,500,000
(for adjusting the inventory to ending inventory)