Question

During the year, TRC Corporation has the following inventory transactions. For the entire year, the company...

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
0 3
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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

Kindly comment if you need further assistance. Thanks‼!

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