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 s 48 30 36 Units 485,000 Beginning inventory 47,000 460,000 22,000 Sales Purchases Ending inventory Dorado expects to purchase 210,000 units of inventory in the fourth quarter of the current calendar year at a cost of $37 per unit, and to have on hand 69,000 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.

Explanation / Answer

Cost of goods sold and Gross profit for three months ending September 30 is:

b. Journal entries are:

LIFO Date Explanation Units Unit Cost Cost Opening Inventory 47,000 30 1,410,000 Purchased Inventory 460,000 36 16,560,000 Cost of goods available for sale (a) 507,000 17,970,000 Cost of goods sold (b) Inventory purchased during 3rd quarter sold 460,000 36 16,560,000 Opening Inventory sold 25,000 30 750,000 485,000 17,310,000 Ending Inventory a-b Opening Inventory 22,000 30 660,000 22,000 660,000 Sales 485,000 48 23,280,000 Less: Cost of goods sold 485,000 17,310,000 Gross Profit 5,970,000

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