Question

ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per unit. ABC Company reported the following inventory information for the month of May: May 1 May 6 May 8 May 13 May 18 May 21 May 28 May 30 Beginning inventory 4,200 units @ $9 cost per unit Purchased 2,000 units @ $12 cost per unit Sold 3,000 units Purchased 4,000 units @ $8 cost per unit Sold 2,100 units Purchased 2,500 units @ $6 cost per unit Sold 2,200 units Purchased 2,300 units @ $17 cost per unit ABC Company reported operating expenses of $26,100 for May and they had a tax rate of 43%. Calculate the amount of gross profit shown on ABC Company's income statement for May using the weighted average method.

Answer 1

	Income Statement
	Sales		(7300 x $ 23)		$ 167,900.00
Less:	Cost of Goods sold		(W.N)		$ (71,978.00)
	Gross Profit				$   95,922.00

Workings:

Computation of cost of goods sold
Date	Particulars	Units	Rate	Amount
1-May	Beginning Inventory	4200	$      9.00	$   37,800.00
6-May	Purchase	2000	$    12.00	$   24,000.00
13-May	Purchase	4000	$      8.00	$   32,000.00
21-May	Purchase	2500	$      6.00	$   15,000.00
30-May	Purchase	2300	$    17.00	$   39,100.00
	Cost of Goods Available for sale	15000	$      9.86	$ 147,900.00
	Cost of Goods sold	7300	$      9.86	$   71,978.00
	(3000 + 2100 + 2200)