Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units of merchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 during February. Further, assume the store made two large purchases during February as follows:

Requirements

1. Calculate the store’s gross profit under both FIFO and LIFO at February 28.

2. What caused the FIFO and LIFO gross profit figures to differ?

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10,000 units @ $3.10 25,000 units @ $2.20 Feb 10 $31,000 $55,000 21