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Homework answers / question archive / 14)

14)

Finance

14).  Sunland Company uses a periodic inventory system. Details for the inventory account for the month of January 2022 are as follows:

Units Per unit price Total

Balance, 1/1/2022 290 $5.00 $1450

Purchase, 1/15/2022 140 ..5.10 714

Purchase, 1/28/2022 140 ..5.30 742

An end of the month (1/31/2022) inventory showed that 230 units were on hand. If the company uses FIFO and sells the units for $10 each, what is the gross profit for the month?

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14). Computation of the gross profit:-

Number of units sold = Number of units available for sale - Ending inventory

= (290 + 140 + 140) - 230

= 570 - 230

= 340 units

Cost of goods available for sale = Number of units sold * Selling price per unit

= 340 * $10

= $3,400

Cost of goods sold = (290 * $5) + ((340 - 290) * $5.10)

= $1,450 + $255

= $1,705

Gross profit = Cost of goods available for sale - Cost of goods sold

= $3,400 - $1,705

= $1,695

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