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Cost of goods sold and gross profit

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The following information for Quadrado Corporation relates to the three-month period ending September 30, 2009.

Units Price Per Unit
Sales....................110,000 $20
Beginning Inventory........20,000 12
Purchases.................100,000 14
Ending Inventory...........10,000 0

Quadrado expects to purchase 150,000 units of inventory in the fourth quarter of 2009 at a cost of $15 per unit, and to have on hand 30,000 units of inventory at year-end. Quadrado uses the last in, first-out (LIFO) method to account for inventory costs.

Determine the cost of goods sold and gross profit amounts to record for the three months ending September 30, 2009. Prepare journal entries to reflect these amounts.

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Solution Summary

The solution explains how to calculate the cost of goods sold and gross profit and pass the related journal entries

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Under the LIFO method, the latest units are assumed to be sold first. The total units sold are 110,000. These will comprise 100,000 units of purchases ...

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