Intro to Accounting for Hion-Majors 7 Gradebook ORION CALCULATOR TOR FULL SCREEN

Question

Intro to Accounting for Hion-Majors 7 Gradebook ORION CALCULATOR TOR FULL SCREENPRINTER VERSTOW(BACK rlef Exercise 6-5 Your answer is incorrect. Try again. n its first month of operation, Kuhlman Company purchased 260 units of inventory for $9, then 360 units for $10, and finally 300 units for $11. At the end of the month, 330 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Phantom profit Question Attempts: 1 of 3 used SAVE FOR LATER SUBMIT ANSEn lRights Reserved. A Division of MacBook Air

Explanation / Answer

CALCULATION OF COST OF GOODS SOLD UNDER FIFO METHOD ND LIFO METHOD Purchases Date Particulars Units (A) Rate Per unit Total Cost Purchases Purchases in First Month 260 $9 $2,340 Purchases in Second Month 360 $10 $3,600 Purchases in Third Month 300 $11 $3,300 Total Goods Available for Sale 920 9240 Closing Stock 330 So, Cost of Goods Sold under FIFO methd will be as below, Purchases in First Month 260 $9 $2,340 Purchases in Second Month 330 $10 $3,300 Total (A) 590 $5,640 So, Cost of Goods Sold under LIFO methd will be as below, Sales From Purchases in Third Month 300 $11 $3,300 Purchases in Second Month 290 $10 $2,900 Total (B) 590 $6,200 So difference of Total ( B )- Total (A) = $ 6,200 - $ 5640 = $560 Answer = If we used the FIFO rather than LIFO than profit will be excess by $ 560

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