Answer: $3,000
Explanation:
Given the following;
2/1/20:
Units purchased = 52
Cost = $47
3/14/20:
Units purchased = 90
Cost $50
5/1/20:
Units purchased = 70
Cost = $52
Total sold = 157
Cost per unit = $70
(157 × $70) = $10,990
Assuming periodic inventory using LIFO;
Under the LIFO Inventory principle, prices of last inventory purchased is associated with the price of goods sold until units or items in the inventory that inventory is exhausted, them move to the second most recent inventory and so on.
LIFO:
(70 × $52) + [(157 - 70) × $50] =
$3640 + (87 × $50)
$3640 + $4350 = $7,990
GROSS INCOME = $(10,990 - 7,990)
GROSS INCOME = $3,000
Answer:
$3,000
Explanation:
Units Cost/unit
2/1/20 Purchase 52 $47
3/14/20 Purchase 90 $50
5/1/20 Purchase 70 $52
157 units were sold at $70 per unit
tax rate = 20%
FIFO method calculates COGS using the price of the last units purchased.
COGS using last in, first out (LIFO) = (70 x $52) + (87 x $50) = $3,640 + $4,350 = $7,990
gross profit = total sales revenue - COGS = (157 x $70) - $7,990 = $10,990 - $7,990 = $3,000
