The following information for Dorado Corporation relates to the three-month peri
ID: 2543827 • Letter: T
Question
The following information for Dorado Corporation relates to the three-month period ending September 30.
Dorado expects to purchase 160,000 units of inventory in the fourth quarter of the current calendar year at a cost of $27 per unit, and to have on hand 49,000 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 435,000 $38 Beginning Inventory 37,000 $20 Purchases 410,000 $26 Ending Inventory 12,000 ?Explanation / Answer
a. determination of cost of goods sold:
since LIFO method is used,
out of sale of 435,000 units,
410,000 will be from current month purchases:
and remaining (435,000 - 410,000 =>25,000) will be from beginning inventory.
cost of goods sold
gross profit:
b. journal entries to reflect these amounts:
Purchases (410,000 * $26) $10,660,000 from beginning inventory (25,000 * $20) $500,000 total cost of goods sold $11,160,000Related Questions
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