Consider the following transactions for Tradex Company Purch

Consider the following transactions for Tradex Company.

Purchase:

January 10 units to €25 each

February 15 units to €30 each

April 20 units at €35 each

Sales:

March 15 units to €50 each

May 18 units at €60 each

Calculate the cost of sales and gross profit based on inventory cost method FIFO.

Calculate the cost of sales and gross profit based on the LIFO inventory cost method.

Solution

FIFO: Purchases Units Rate Total Jan 10 25 250 Feb 15 30 450 April 15 35 525 Cost of good sold Units Rate Total March 10 25 250 5 30 150 May 10 30 300 8 35 280 Total COGS 980 Sales March 15 50 750 May 18 60 1080 1830 Cost of good sold 980 Gross profit Sales - Cost of good sold 1830 - 980 850 LIFO: Cost of good sold Units Rate Total March 15 30 450 May 18 35 630 Total 1080 Sales as calculated in part above 1830 Cost of good sold 1080 Gross profit Sales - Cost of good sold 1830-1080 750