E$6\mathrm{.}6($LO $2,3)($Apply perpetual average cost.$)$ Basis Furniture Ltd$.$ uses a perpetual inventory

system and has a beginning inventory, as at June $1,$ of $500$ bookcases at a cost of $$125$ each.

During June, the company had the following purchases and sales of bookcases:

Instructions

a$.$ Determine the cost of goods sold and the cost of the ending inventory using the average

cost formula. $($Use unrounded numbers in your calculations but round to the nearest

cent for presentation purposes in your answer.$)$

b$.$ Calculate Basis Furniture's gross profit and gross profit margin for the month of June.

c$.$ Is the gross profit determined in part $($b$)$ higher or lower than it would be if Basis

Furniture had used FIFO? Explain.