Question

Bramble Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows: Units Per unit price Total Balance, 1/1/18 200 $6.00 $1200 Purchase, 1/15/18 70 5.30 371 Purchase, 1/28/18 70 5.40 378 An end of the month (1/31/18) inventory showed that 85 units were on hand. If the company uses FIFO and sells the units for $12 each, what is the gross profit for the month

Answer 1

Answer:

Bramble Company

The gross profit for the month is:

$2,588.50

Explanation:

a) Data and Calculations:

Selling price = $12

                                  Date    Units      Per unit price    Total Balance,

Beginning Inventory 1/1/18    200              $6.00            $1,200

Purchase,                1/15/18      70                 5.30                 371

Purchase,               1/28/18      70                 5.40                 378

Cost of goods available       340                                     $1,949

Calculating the cost of goods available for sale allocated to, using FIFO:

Ending inventory    1/31/18     85 (70 * $5.40 + 15 * $5.30) = $457.50

Cost of goods sold, 255 units ($6.00 * 200 + 55 * $5.30) $1,491.50

Income Statement, December 31, 2018:

Sales Revenue = ($12 * 340) $4,080.00

Cost of goods sold                    1,491.50

Gross profit                            $2,588.50