Park Company reported the following March purchases and sales data for its only
ID: 2360784 • Letter: P
Question
Park Company reported the following March purchases and sales data for its only product. Date Activities Units Acquired at Cost Units Sold at Retail Mar. 1 Beginning inventory 150 units @ $7.00 = $ 1,050 Mar. 10 Sales 90 units @$15 Mar. 20 Purchase 220 units @ $6.00 = 1,320 Mar. 25 Sales 145 units @$15 Mar. 30 Purchase 90 units @ $5.00 = 450 Totals 460 units $ 2,820 235 units Park uses a perpetual inventory system. For specific identification, ending inventory consists of 225 units, where 90 are from the March 30 purchase, 80 are from the March 20 purchase, and 55 are from beginning inventory. 1. Complete comparative income statements for the month of March for Park Company for the four inventory methods. Assume expenses are $1,600, and that the applicable income tax rate is 30%. (Round per unit costs to three decimal places. Round your answers to the nearest dollar amounts. Input all amounts as positive values. Omit the "$" sign in your response.) PARK COMPANY Income Statements For Month Ended March 31 Specific Identification Weighted Average FIFO LIFO Sales $ $ $ $ Cost of goods sold Gross profit Expenses Income before taxes Income tax expense Net income $ $ $ $Explanation / Answer
These are the items that have been specifically identified. Assume that ending inventory is made up of 100 units from the March 14 purchase, 120 units from the July 30 purchase, and all 600 units from the October 26 purchase. You subtract them from the goods that are available for sale ($27,750) to calculate COGS. 27,750 - (100 x 15) - (120 x 20) - (600 x 25) = $8,850 COGS Subtract COGS from Sales to calculate gross profit. (90 x 40) + (140 x 40) + (300 x 40) - 8,850 = $12,350 gross profit