Question

Determine the gross profit using the periodic inventory system and the LIFO inventory method, assuming that 18 units were sold at a sales price of $14. Date Item Units Cost Total January 1 Beginning inventory 5 $3 $15 January 12 Purchase 10 4 40 January 18 Purchase 8 5 40 Totals 23 $95 a.$182 b.$80 c.$172 d.$95

Answer 1

The gross profit using the periodic inventory system and the LIFO inventory method for 18 units sold at $14 each is $172. The cost of goods sold is calculated using the costs of the most recent purchases under LIFO methodology, which amounts to $80. Subtracting COGS from the sales revenue gives us the gross profit.

Step-by-step explanation:

To determine the gross profit using the periodic inventory system and the LIFO (Last-in, First-out) inventory method, we need to calculate the cost of goods sold (COGS) and then subtract it from the sales revenue. The student has provided information that 18 units were sold at a price of $14 each.

Sales revenue = 18 units x $14 = $252.

Under LIFO, the last units purchased are the first ones sold. Therefore, we will use the cost of the most recent purchases to calculate COGS:

8 units at $5 = $40

10 units at $4 = $40

The remaining 0 units (of the 18 units sold) would come from the beginning inventory at $3 each, but since we have already accounted for 18 units, we do not need to consider the beginning inventory.

COGS under LIFO = (8 units x $5) + (10 units x $4) = $40 + $40 = $80.

Gross profit = Sales revenue - COGS = $252 - $80 = $172.

Therefore, the correct answer is c. $172.

Answer 2

C) $172

Step-by-step explanation:

total revenue = 18 units x $14 per unit = $252

cost of goods sold using LIFO method:

Date Item Units Cost Total

January 1 Beginning inventory 5 $3 $15

January 12 Purchase 10 $4 $40

January 18 Purchase 8 $5 $40

Totals 23

COGS = (8 x $5) + (10 x $4) = $40 + $40 = $80

revenue $252

- COGS ($80)

gross profit $172