The following information for Dorado Corporation relates to the three-month peri
ID: 2541966 • Letter: T
Question
The following information for Dorado Corporation relates to the three-month period ending September 30.
Dorado expects to purchase 190,000 units of inventory in the fourth quarter of the current calendar year at a cost of $33 per unit, and to have on hand 61,000 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.
Units Price per Unit Sales 465,000 $ 44 Beginning inventory 43,000 26 Purchases 440,000 32 Ending inventory 18,000 ?Explanation / Answer
Answer
Value of ending inventory = 18000 x $26 = $468,000
ANSWER (a)
= (43000 x $26) + (440000 x $32) - $468000
=$14,730,000
ANSWER (b)
Journal entries on the basis of above aamounts
General Journal
Debit ($)
Credit ($)
Purchases
14080000
Cash/Accounts payable
500
1408000
(purchases made)
Cash/Accounts receivables
20460000
Sales
20460000
(total sales)
Income Summary
14730000
Cost of Goods Sold
14730000
(cost of goods sold recorded)
General Journal
Debit ($)
Credit ($)
Purchases
14080000
Cash/Accounts payable
500
1408000
(purchases made)
Cash/Accounts receivables
20460000
Sales
20460000
(total sales)
Income Summary
14730000
Cost of Goods Sold
14730000
(cost of goods sold recorded)
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