The Divine Merchandising Corporation began March operations with merchandise inv
ID: 2417127 • Letter: T
Question
The Divine Merchandising Corporation began March operations with merchandise inventory of 6 units, each of which cost $27. During March, Divine Merchandising made the following purchases: (1) March 4, 12 units @ $28 per unit, (2) March 15, 18 units @ $30 per unit, (3) March 26, 14 units @ $32 per unit. During March the Divine Merchandising Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, and March 28, 12 units. Operating expenses in March were $640. The Company estimates its income taxes expense will be approximately 35% of income before taxes.
Using the FIFO inventory method, determine the gross profit for March.
$1,166
$1,920
$754
$3,086
$1,486
a.$1,166
b.$1,920
c.$754
d.$3,086
e.$1,486
Explanation / Answer
The Divine Merchandising Date units Rate Amt $ Opening Balance 6.00 27.00 162.00 Purchases 4-Mar 12.00 28.00 336.00 15-Mar 18.00 30.00 540.00 26-Mar 14.00 32.00 448.00 Total 50.00 1,324.00 Sales in Mar 6-Mar 6.00 27.00 162.00 5.00 28.00 140.00 20-Mar 7.00 28.00 196.00 10.00 30.00 300.00 28-Mar 8.00 30.00 240.00 4.00 32.00 128.00 Cost of goods sold 40.00 1,166.00 Sales revenue 40.00 48.00 1,920.00 Gross profit Mar Details Amt $ Sales revenue 1,920.00 Cost of Goods sold 1,166.00 Gross profit Mar 754.00 So option c is correct
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