I need to calculate the GROSS PROFIT of a company fromthe transaction list below. I am utilizing the LIFO method in aperpetual inventory system. I have completed journal entries forthis problem, but my current gross profit (which is $3,496.85) isoff by "a few thousand" according to my teacher, so I need someoneto explain to me where I'm going wrong, how to fix it, and what theCORRECT, SIGNIFICANTLY HIGHER GROSS PROFIT is. Thanks inadvance!
8/6 Ts purchased 200 long sleeve blue shirtson account from Frooty for $3 each. Terms FOB-SP 2/10,n30 Shipping costs = $40
8/8 Ts purchased 500 short sleeve blueshirts on account from Frooty for $2.50 each. Terms FOB-D 2/15, n30Shipping costs = $50
8/10 Ts notified Frooty that 50 of the long sleeveshirts were purple. After negotiation, Frooty agreed to reduce theprice of those shirts to $2 each. Ts agreed to keep the shirts.
8/11 Ts purchased 400 long sleeve blue shirts onaccount from Frooty for $3.50 each. Terms FOB-D n/eom Shippingcosts = $40
8/12 Ts sold 290 long sleeve blue shirts to RSkoolon account for $8 each. Terms FOB-SP 1/10, n30Shipping costs = $30
8/14 Ts paid for the purchase on the6th.
8/16 Ts sold 20 long sleeve purple shirts to RSkool on accountfor $5 each. Terms FOB-D 2/10, n/eom Shipping costs = $5
8/18 Ts paid for the short sleeve shirts
8/20 Ts sold 380 short sleeve shirts to RSkool onaccount for $7 each. Terms FOB-SP n/eom Shipping costs= $38
8/21 Ts received payment from RSkool for the longsleeve blue shirts
8/22 RSkool returned 100 of the short sleeve shirtsbecause they were too small.
8/24 Ts sold 200 long sleeve blue shirts to RSkoolon account for $8 each. Terms FOB-D 3/5, n/30 Shippingcosts = $30
8/29 Ts received payment from RSkool for thepurchase on the 24th
8/30 Ts received payment from RSkool for the purpleshirts.
8/31 Ts received payment from RSkool for thepurchase on the 20th
8/31 Ts paid for the purchase on the11th.
I need to calculate the GROSS PROFIT of a company fromthe transaction list below. I am utilizing the LIFO method in aperpetual inventory system. I have completed journal entries forthis problem, but my current gross profit (which is $3,496.85) isoff by "a few thousand" according to my teacher, so I need someoneto explain to me where I'm going wrong, how to fix it, and what theCORRECT, SIGNIFICANTLY HIGHER GROSS PROFIT is. Thanks inadvance!
8/6 Ts purchased 200 long sleeve blue shirtson account from Frooty for $3 each. Terms FOB-SP 2/10,n30 Shipping costs = $40
8/8 Ts purchased 500 short sleeve blueshirts on account from Frooty for $2.50 each. Terms FOB-D 2/15, n30Shipping costs = $50
8/10 Ts notified Frooty that 50 of the long sleeveshirts were purple. After negotiation, Frooty agreed to reduce theprice of those shirts to $2 each. Ts agreed to keep the shirts.
8/11 Ts purchased 400 long sleeve blue shirts onaccount from Frooty for $3.50 each. Terms FOB-D n/eom Shippingcosts = $40
8/12 Ts sold 290 long sleeve blue shirts to RSkoolon account for $8 each. Terms FOB-SP 1/10, n30Shipping costs = $30
8/14 Ts paid for the purchase on the6th.
8/16 Ts sold 20 long sleeve purple shirts to RSkool on accountfor $5 each. Terms FOB-D 2/10, n/eom Shipping costs = $5
8/18 Ts paid for the short sleeve shirts
8/20 Ts sold 380 short sleeve shirts to RSkool onaccount for $7 each. Terms FOB-SP n/eom Shipping costs= $38
8/21 Ts received payment from RSkool for the longsleeve blue shirts
8/22 RSkool returned 100 of the short sleeve shirtsbecause they were too small.
8/24 Ts sold 200 long sleeve blue shirts to RSkoolon account for $8 each. Terms FOB-D 3/5, n/30 Shippingcosts = $30
8/29 Ts received payment from RSkool for thepurchase on the 24th
8/30 Ts received payment from RSkool for the purpleshirts.
8/31 Ts received payment from RSkool for thepurchase on the 20th
8/31 Ts paid for the purchase on the11th.
