The Patel Merchandising Corporation began June operations wi

The Patel Merchandising Corporation began June operations with merchandise inventory of 14 units, each of which cost $130. During June, Patel Merchandising made the following purchases: (1) June 6, 26 units @ $132 per unit, (2) June 15, 28 units @ $136 per unit, (3) June 26, 32 units @ $140 per unit. During June the Company sold the following units at a sales price of $220 per unit: June 8, 18 units, June 20, 24 units, June 29, 30 units. Operating expenses in June were $3,200. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the FIFO inventory method

a) determine the inventory dollar amount on June 1.

b) determine the dollar amount of purchases made in June.

c) determine the cost of goods available for sale during June.

d) determine the cost of goods sold during June.

e) determine the inventory dollar amount on June 30.

f) determine the sales dollar amount for June.

g) determine the gross profit for June.

h) determine the income before taxes for June.

i) determine the income taxes expense for June.

j) determine the net income for June.

Solution

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. a) determine the inventory dollar amount on June 1. 14 units*130 per unit 1820 b) determine the dollar amount of purchases made in June. Date Units Unit Price Total Price Jun 6 26 132 3432 Jun 15 28 136 3808 Jun 26 32 140 4480 11720 c) determine the cost of goods available for sale during June. Beginning Inventory 1820 add: Purchases 11720 Cost of Goods available for sale 13540 d) determine the cost of goods sold during June. Cost of Goods Sold Sale: Date Units Unit sold from purchase Per unit Cost COGS Jun 8 18 14 130 1820 4 132 528 Jun 20 24 22 132 2904 2 136 272 Jun 29 30 26 136 3536 4 140 560 Cost of Goods Sold 9620 e) determine the inventory dollar amount on June 30. Ending Inventory: From Purchase of 26th June 28 Units 140 per unit price 3920 f) determine the sales dollar amount for June. Sale Value 15840 72 Units*220 Per unit price g) determine the gross profit for June. Sale Value f 15840 Less: Cost of Goods Sold d 9620 Gross Profit 6220 h) determine the income before taxes for June. Sale Value f 15840 Less: Cost of Goods Sold d 9620 Gross Profit 6220 Less: Operating Expense 3200 Income Before Tax 3020 i) determine the income taxes expense for June. Sale Value f 15840 Less: Cost of Goods Sold d 9620 Gross Profit 6220 Less: Operating Expense 3200 Income Before Tax 3020 Less: Income Tax 35% 1057 j. Net Income 3020-1057 1963