Module3ccc6 - (iii) Gross Profit (iv) Gross Profit Rate...

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(a) COST OF GOODS AVAILABLE FOR SALE Date Explanation Units Unit Cost Total Cost Feb. 1 Beginning Inventory 3 $545.00 $1,635.00 Feb. 2 Purchase 2 550.00 1,100.00 Mar. 2 Purchase 1 567.00 567.00 Apr. 1 Purchase 2 561.00 1,122.00 May 4 Purchase 3 573.33 1,720.00 Total 11 $6,144.00 (b) LIFO (i) Ending Inventory (ii) Cost of Goods Sold Date Units Unit Cost Total Cost Cost of goods available for sale $6,144.00 Feb. 1 3 $545.00 $1,635.0 0 Less: Ending inventory 2,185.00 Feb. 2 1 550.00 550.0 0 Cost of goods sold $3,959.00 4 $2,185.0 0 (iii) Gross Profit (iv) Gross Profit Rate Sales $7,350.00 $3,391.00 46.14% Less: Cost of goods sold 3,959.00 $7,350.00 Gross profit $3,391.00 *($1,050 + $2,100 + $3,150 + $1,050) FIFO
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(i) Ending Inventory (ii) Cost of Goods Sold Date Units Unit Cost Total Cost Cost of goods available for sale $6,144.00 May 4 3 $573.33 $1,720.0 0 Less: Ending inventory 2,281.00 Apr. 1 1 561.00 561.0 0 Cost of goods sold $3,863.00 4 $2,281.0
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Unformatted text preview: (iii) Gross Profit (iv) Gross Profit Rate Sales $7,350.00 $3,487.00 47.44% Less: Cost of goods sold 3,863.00 $7,350.00 Gross profit $3,487.00 Average Cost (i) Ending Inventory (ii) Cost of Goods Sold $6,144.00/11 = $558.545 Cost of goods available for sale $6,144.00 Less: Ending inventory $2,234.18 Units Unit Cost Total Cost Cost of goods sold $3,909.82 4 $558.545 $2,234.18 (iii) Gross Profit (iv) Gross Profit Rate Sales $7,350.00 $3,440.18 46.81% Less: Cost of goods sold 3,909.82 $7,350.00 Gross profit $3,440.18 (d) Natalie is thinking of getting a bank loan. If this is the only factor Natalie has to con-sider in choosing an inventory cost flow assumption, which cost flow assumption would you recommend that Natalie use? Why?...
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Module3ccc6 - (iii) Gross Profit (iv) Gross Profit Rate...

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