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Neverstop Corporation sells item A as part of its product line. Information about the beginning inventory,...

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Accounting

Neverstop Corporation sells item A as part of its product line.Information about the beginning inventory, purchases, and sales ofitem A are given in the following table for the first six months ofthe current year. The company uses a perpetual inventorysystem:

PurchasesSales
DateNumber of UnitsUnit CostNumber of UnitsSales Price
January 1 (beginning inventory)580$4.10
January 24380$5.60
February 8680$4.20
March 16380$5.60
June 11680$4.20

2. Compute the gross profit for the first six months of thecurrent year by using the FIFO costing method.(Do not round intermediate calculationsand round the final answer to 2 decimalplaces.)

Answer & Explanation Solved by verified expert
4.4 Ratings (749 Votes)

Solution

Gross profit $ 1,122

Working

Units Cost per unit value
Beginning Balance 580 $                     4.10 $ 2,378
Purchases
680 $                     4.20 $ 2,856
680 $                     4.20 $ 2,856
Cost of goods available for sale 1940 $ 8,090

.

FIFO
Total Units Available for sale 1940
Units Sold 760
Closing Stock in Units 1180
Valuation
Ending Inventory 680 @ $               4.20 $        2,856.00
500 @ $               4.20 $        2,100.00
Value Of Ending Inventory $        4,956.00
Cost of Goods sold 8090 minus 4956 $        3,134.00

.

FIFO
Sales revenue (760 x 5.6) $              4,256
Less: Cost of Goods Sold $              3,134
Gross profit $              1,122

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