The following information for Dorado Corporation relates to the three-month peri

Question

The following information for Dorado Corporation relates to the three-month period ending September 30 Price per Unit $ 46 28 34 Units Sales 475,000 45,000 450,000 20,000 Beginning inventory Purchases Ending inventory Dorado expects to purchase 200,000 units of inventory in the fourth quarter of the current calendar year at a cost of $35 per unit, and to have on hand 65,000 units of inventory at year-end. Dorado uses the last-in, first-out (LIFO) method to account for inventory costs. a. Determine the cost of goods sold and gross profit amounts Dorado should record for the three months ending September 30 b. Prepare journal entries to reflect these amounts. Complete this question by entering your answers in the tabs below Required A Required B Determine the cost of goods sold and gross profit amounts Dorado should record for the three months ending September 30 Cost of goods sold Gross profit

Explanation / Answer

Under LIFO units acquired last are sold first so ending inventory is left from beginning inventory

cost of ending inventory = [20000*28]=560000

1)cost of goods sold = Beginning inventory +purchase-ending inventory

       = [45000*28]+[450000*34]-560000

              = 1260000+ 15300000-560000

              = 16,000,000

Gross margin = sales -cost of goods sold

   = [475000*46]-16000000

= 21850000-16000000

= 5850000

2)

Date Account Debit credit 1 Accounts receivable 21850000 sales revenue 21850000 2 cost of goods sold 16000000 merchandise inventory 16000000

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