Express Lane, Inc., a regional convenience store chain, maintains milk inventory by the gallon. The first month’s milk purchases and sales at its Freeport, FL, location follows: 39 Nov 21 gallon @ $2.00 each 62 gallons @ $2.10 each 132 gallons @ $2.20 each 14The store sold 4 gallons of milk to a customer. Describe which costs would be sold and which costs would remain in inventory. Then, identify the amount that would be reported in inventory on November 15 using a. FIFO. b. LIFO. c. average cost.
FIFOLIFOAverage Sales$320 Cost of goods sold$170$180$175 Gross profit $150$140$145 48 Highest gross profit; highest net income Lowest gross profit; lowest net income If inventory prices are increasing
Grandma Kate Bakery achieved Sales revenue of $52,000 and Cost of goods sold of $22,000. Compute Grandma Kate’s correct Gross profit if the company made either of the following independent accounting errors. Show your work. a.Ending inventory is overstated by $6,000. b.Ending inventory is understated by $6,000. 60 Inventory As reported, correct a. overstated by $6,000 b. understated by $6,000 Sales Revenue$ 52,000 Cost of goods sold(22,000)(16,000)(28,000) Gross Profit$ 30,000$ 36,000$ 24,000