Question

Blossom Company had the following inventory transactions occur during 2022: Units Cost/unit Feb. 1, 2022 Purchase 127 $53 Mar. 14, 2022 Purchase 219 $55 May 1, 2022 Purchase 156 $58 The company sold 361 units at $74 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company’s gross profit using FIFO?

Answer 1

Given:

Particular Date Unit Amount

Purchase Feb.1 127 $53

Purchase Mar.14 219 $55

Purchase May.1 156 $58

Sales 361 $74

Find:

Gross profit using FIFO

Computation of Total sale:

Total sale = 361 × $74

Total sale = $26,714

Computation of Cost of goods sold:

Cost of goods sold = (127 × $53) + (219 × $55) + [(361-127-219) × $58]

Cost of goods sold = ($6,731) + ($12,045) + ($870)

Cost of goods sold = $19,646

Computation of Gross profit:

Gross profit = Total sale - Cost of goods sold

Gross profit = $26,714 - $19,646

Gross profit = $7,068