Harpo's Used Cars uses the specific identification method of costing inventory. During March Harpo purchased three cars for $12000 $14400 and $19200 respectively. During March two cars are sold for a total of $36400. Harpo determines that at March 31 the $14400 car is still on hand. What is Harpo's gross profit for March?
A) $2800.
B) $5200.
C) $4200.
D) $10000.

Question

Quizplus · Accepted Answer

Using specific identification method, the cost of goods sold would be the sum of the cost of the two cars sold, which is $12000 + $19200 = $31200.
The gross profit would be the total revenue minus cost of goods sold, which is $36400 - $31200 = $5200. Therefore, the answer is B) $5200.

Harpo's Used Cars Uses the Specific Identification Method of Costing