Question

During the year, TRC Corporation has the following inventory transactions.

For the entire year, the company sells 428 units of inventory for $59 each

Required:

1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

Date		Transaction	Number of Units			Unit Cost			Total Cost
Jan.	1	Beginning inventory		49		$	41			$	2,009
Apr.	7	Purchase		129			43				5,547
Jul.	16	Purchase		199			46				9,154
Oct.	6	Purchase		109			47				5,123
				486						$	21,833

	Sales revenue Gross profit

Answer 1

Number of units available for sale = 486

Number of units sold = 428

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

= 486-428

= 58

As per FIFO method, ending inventory consists of the units purchased at the latest. Hence, ending inventory of 58 units must be from the purchase made on October 6.

Ending inventory = units x Cost per unit

= 58 x 47

= $2,726

Cot of goods sold = Cost of goods available for sale - Cost of ending inventory

= 21,833-2,726

= $19,107

Sales = Number of units sold x Selling price per unit

= 428 x 59

= $25,252

Gross profit = Sales - Cost of goods sold

= 25,252-19,107

= $6,145

Sales revenue	$25,252
Gross profit	$6,145
Cost of ending inventory	$2,726
Cost of goods sold	$19,107

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