Question 7 5.5 pts ABC Company employs a periodic inventory system and sells its

Question

Question 7 5.5 pts ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per unit. ABC Compan y had the following inventory information available for the month of Ma y: May 1 Beginning inventory 1,400 units $12 cost per unit May 8 Sold 1,100 units May 13 Purchased 1,800 units $21 cost per unit May 18 Sold 1,000 units May 21 Purchased 1,600 units $15 cost per unit May 28 Sold 750 units May 30 Purchased 1,200 units $20 cost per unit During May, ABC Company reported operatin g expenses of $5,000 and had an income tax rate of 36% Calculate the amount of net income report ed on ABC Company's income statement for May using the LIFO method

Explanation / Answer

Income statement for the month of May Sales $65,550 Cost of goods sold $45,450 Gross Profit $20,100 Operating Expenses $5,000 Net Income before Tax $15,100 Income tax $5,436 Net income $9,664 Working Note: Details of Inventory Purchased & Sold Date Details Units Rate Amount Cost of inventory sold 1-May Beginning Inventory 1400 $12 $16,800 8-May Sold 1100 $23 $25,300 $13,200 (1100 x $12) 13-May Purchased 1800 $21 $37,800 18-May Sold 1000 $23 $23,000 $21,000 (1000 x $21) 21-May Purchased 1600 $15 $24,000 28-May Sold 750 $23 $17,250 $11,250 (750 x $15) 30-May Purchased 1200 $20 $24,000

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