Question

Eneri Company's inventory records show the following data:

Eneri sells the units for $13 periodic inventory method.
Inventory, January 1 Purchases: June 18 November 8
Units 10,000 9,000 6,000
Unit Cost $9.20
8.00 7.00
A physical inventory on December 31 shows 4,000 units on hand. each. The company has an effective tax rate of 20%. Eneri uses the If the company uses FIFO, what is the gross profit for the period? a. $95,000
b. $99,266 c. $99,960 d. $103,800

Answer 1

The gross profit for Eneri Company for the period, using the FIFO method, is $95,000, which is calculated by subtracting the cost of goods sold of $178,000 from the sales revenue of $273,000.

Step-by-step explanation:

To calculate the gross profit for the period using the First-In, First-Out (FIFO) inventory method, we need to determine the cost of goods sold (COGS) by using the earliest purchase prices first. Eneri Company sold units at $13 each. With 4,000 units remaining at the end of the period, this implies that Eneri Company sold 10,000 (beginning inventory) + 9,000 (June purchase) + 6,000 (November purchase) - 4,000 (ending inventory) = 21,000 units during the period.

Using FIFO:

• First, we sell the 10,000 units from the beginning inventory at $9.20 each, totalling $92,000.
• Next, we sell the 9,000 units from the June purchase at $8.00 each, totalling $72,000.
• We then sell 2,000 units from the November purchase at $7.00 each (because we had 21,000 - 10,000 - 9,000 = 2,000 left to sell from the November purchase), totalling $14,000.

The COGS is therefore $92,000 + $72,000 + $14,000 = $178,000.

The sales revenue is 21,000 units sold at $13 each, totalling $273,000. Therefore, the gross profit would be the sales revenue minus COGS, which is $273,000 - $178,000 = $95,000.

So the correct answer for the gross profit using FIFO for Eneri Company is $95,000.