Rose industries had 400 units of product ab in their inventory, costing $12 each. 600 more units of product ab were purchased fo
r $18 each. rose industries eventually sold 700 units for $30 each. by what amount did the lifo liquidation overstate normal gross profit? a.$ -0-
b.$1,200
c.$1,800
d.$ 600
The company in here is forced to sale their older inventory
because of the demand of 700 units while the inventory that last entered their
warehouse was only 600 units. Since they are following the LIFO method of
inventory, LIFO liquidation will take place and the normal gross profit will
differ than the actual profit. The sales for Rose Industries would be $21,000
(700 units x $30). The COGS should have been $12,600 (700 units x $18)
following the normal sale of inventory giving the normal gross profit as $8,400
($21,000 - $12,600). But since the demand is higher than the inventory that was
last purchased, the company needs to sell 100 units of product ab that costs
$12. Therefore, the COGS would be $12,000 [(600 units x $18) + (100 units x
$12). Therefore the actual gross profit is $9,000 which is $600 higher than the
normal gross profit.
conditional offer is an agreement between two parties that an offer will be made if a specific condition is met. Conditional offers are used in real estate transactions whereby a buyer's offer on a home is contingent on something getting done for the purchase to go through
