Question

Required information

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During the year, TRC Corporation has the following inventory transactions.



Date Transaction Number of Units Unit Cost Total Cost
Jan. 1 Beginning inventory 53 $ 45 $ 2,385
Apr. 7 Purchase 133 47 6,251
Jul. 16 Purchase 203 50 10,150
Oct. 6 Purchase 113 51 5,763
502 $ 24,549


For the entire year, the company sells 433 units of inventory for $63 each.

Required:

1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

Answer 1

1. Ending inventory = $3519

2. Cost of Goods Sold = $21030

3. Sales Revenue = $27279

4. Gross Profit = $6249

Step-by-step explanation:

FIFO method of inventory valuation is whereby the stock that first comes into the business, leaves first. This is common in perishable inventory such as vegetables or fruits.

Jan 1. Beginning inventory: 53 units x $45 = $2385

Total

53 units x $45 = $2385

Apr 7. Purchase 133 units x $47 = $6251

Total

53 units x $45 = $2385

133 units x $47 = $6251

Jul 16. Purchase 203 units x $50 = $10150

Total

53 units x $45 = $2385

133 units x $47 = $6251

203 units x $50 = $10150

Oct 6. Purchase 113 units x $51 = $5763

53 units x $45 = $2385

133 units x $47 = $6251

203 units x $50 = $10150

113 units x $51 = $5763

1. Ending inventory = 502 - 433 = 69 hence,

69 units x $51 = $3519

2. Cost of Goods Sold =

[$2385 + $6251 + $10150 + (44 units x $51)] = $21030

OR $24549 - 3519 = $21030

3. Sales Revenue =

433 units x $63 = $27279

4. Gross Profit = Sales Revenue - Cost of Goods Sold hence,

$27279 - 21030 = $6249