Romanoff Industries had the following inventory transactions occur during 2015: $$\begin{array} { l l c c }
& & \text { Units } & \text { Cost/unit } \
2 / 1 / 15 & \text { Purchase } & 54 & \$ 45 \
3 / 14 / 15 & \text { Purchase } & 93 & \$ 47 \
5 / 1 / 15 & \text { Purchase } & 66 & \$ 49
\end{array}$$ The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Question

Romanoff Industries had the following inventory transactions occur during 2015: $$\begin{array} { l l c c } 
& & \text { Units } & \text { Cost/unit } \
2 / 1 / 15 & \text { Purchase } & 54 & \$ 45 \
3 / 14 / 15 & \text { Purchase } & 93 & \$ 47 \
5 / 1 / 15 & \text { Purchase } & 66 & \$ 49
\end{array}$$ The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars)

Quizplus · Accepted Answer

LIFO (Last-In, First-Out) assumes that the last units purchased are the first ones sold. Therefore, the cost of goods sold is calculated using the cost of the most recent purchases. In this case, the cost of goods sold is:54 units x $49 = $2,64693 units x $47 = $4,361Total cost of goods sold = $7,007Gross profit = Sales - Cost of goods soldGross profit = $150 x $70 - $7,007Gross profit = $10,500 - $7,007Gross profit = $3,493 (rounded to whole dollars)

Romanoff Industries Had the Following Inventory Transactions Occur During 2015