Chapter 6: Q33PGB_ 2 (page 369)

Exercise World began January with merchandise inventory of 90 crates of vitamins that cost a total of $5,850. During the month, Exercise World purchased and soldmerchandise on account as follows:
Jan. 2 Purchase 130 crates @ $ 76 each
5 Sale 140 crates @ $ 100 each
16 Purchase 170 crates @ $ 86 each
27 Sale 180 crates @ $ 104 each
Requirements
2. Prepare a perpetual inventory record, using the LIFO inventory costing method,and determine the company’s cost of goods sold, ending merchandise inventory,and gross profit.

Short Answer

Expert verified

Cost of goods sold:$25,800

Ending Inventory:$4,550

Gross Profit: $6,920

Step by step solution

Perpetual inventory table under the LIFO method

Computation of gross profit

$Total Revenue = Sale value of 5 th Jan + Sale value of 27 Jan = (140 \times $ 100) + (180 \times $ 104) = 14, 000 + $ 18, 720 = $ 32, 720 Gross Profit = Total Revenue ‐ Cost ogf goods sold = $ 32720 ‐ $ 25800 = $ 6, 920$

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	2019	2018	2017
Net Sales Revenue	\( 220,000	\) 162,000	\( 176,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(29,000	\)46,000
Net cost of purchase	132,000	90,000	76,000
Cost of goods available for sale	154,000	119,000	122,000
Less: Ending Merchandise Inventory	32,000	22,000	29,000
Cost of goods sold	122,000	97,000	93,000
Gross Profit	98,000	65,000	83,000
Operating Expenses	72,000	38,000	48,000
Net Income	\( 26,000	\) 27,000	$ 35,000

Short Answer

Step by step solution

Perpetual inventory table under the LIFO method

Computation of gross profit

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