Question

please assist with the requirements for this problem - thank you

E6-39B (similar to) The Shoreline Shop had the following inventory data: E: (Click the icon to view the inventory data.) Read the requirements Requirement 1. Shoreline need to know the company's gross profit percentage and rate of inventory turnover for 2018 under (1) FIFO, and (2) LIFO. Begin by calculating the gross profit percentage. (Enter the percentage to the nearest tenth of a percent, X.X%.) a FIFO b. LIFO Gross profit percentage L % % Data Table 2017 2018 29,245 17,600 Ending inventory at: FIFO Cost ........$ 20,075 $ LIFO Cost 12.540 Cost of goods sold at: FIFO Cost $ LIFO Cost Sales revenue 86,310 97,955 137,000 Print Done * Requirements 1. Company managers need to know the company's gross profit percentage and rate of inventory turnover for 2018 under 1. FIFO. 2. LIFO. 2. Which method produces a higher gross profit percentage? A higher inventory turnover? Print Done

Answer 1

Answer
1		FIFO	LIFO
	Gross Profit percentage	37%	28.50%
2	FIFO method produces highest gross profit percentage
	LIFO method produces highest Inventory Turnover ratio
	Workings:
	Gross Profit percentage:
		FIFO	LIFO
(i)	Sales	$         137,000	$           137,000
Less:	Cost of goods sold	$           86,310	$             97,955
(ii)	Gross Profit	$           50,690	$             39,045
(ii) / (i)	Gross Profit percentage	37%	28.50%

2	FIFO method produces highest gross profit percentage
	Inventory Turnover:
		FIFO	LIFO
(i)	Cost of goods sold	$           86,310	$             97,955
(ii)	Average Inventory	$           24,660	$             15,070
(i) / (ii)	Inventory Turnover	3.5	6.5

	LIFO method produces highest Inventory Turnover ratio
	Average Inventory:
		FIFO	LIFO
	2017	$           20,075	$             12,540
	2018	$           29,245	$             17,600
(i)	Total	$           49,320	$             30,140
(i) / 2	Average Inventory	$           24,660	$             15,070