ABC had a beginning inventory on January 1 of 100 units of Product X at a cost of $20 per unit.

During the year, the following purchases were made.

• Purchase 1 - 150 units at $18
• Purchase 2 - 250 units at $16
• Purchase 3 - 150 units at $14
• Purchase 4 - 200 units at $12

The Company uses a periodic inventory system and has 150 units on hand according to physical count.

Instructions

1. Determine the (1) units available for sale, (2) cost of goods available for sale for the year, (3) units sold. (1.5 points - 0.5 points each)
2. Determine the cost of ending inventory using the Last In First Out Method. (2 points)
3. Determine the cost of goods sold using the Last In First Out Method using the formula. (2 points)
4. Prove the accuracy of the cost of goods sold computed above using the Last In First Out Method. (2 points)
5. Calculate the Gross Profit using the number of units sold calculated above and assuming that the goods were sold at $40 per unit. (2 points)