PLEASE EXPLAIN THE FIFO METHOD TOO PLEASE

The Tourist Shop sells souvenirs at various locations along the Florida Gulf Coast. During May and June, the company experienced the following events related to t-shirt sales:

May

1. Purchased inventory for $2,400 on account.
2. Sold 350 units of inventory for $15 each.
3. Paid suppliers $3,000.

June

4. Purchased inventory for $3,600 on account.
5. Sold 500 units for $15 each.

Related to inventory, The Tourist Shop also recorded the following:

Apr. 30	Ending balance 200 units @ $7	= $1,400
May. 15	Purchased 300 units @ $8	= $2,400
June 5	Purchased 400 units @ $9	= $3,600

The Tourist Shop had the following account balances at April 30:

Accounts payable	$ 2,400
Cash	10,000
Common stock	5,000
Inventory	1,400
Retained earnings	4,000

Required:

1. Add labels to the first blank line in the horizontal statements model to reflect the components of each statement: Assets, Expenses, Liabilities, Net Income, Revenue, and Stockholders Equity.
2. Add the account titles to the third blank link, grouping them according to the appropriate component of each statement. Add the beginning account balances in the space provided
3. Record the transactions above in the horizontal statements model provided. The Tourist Shop uses the FIFO method.
4. What is the total amount of gross profit that The Tourist Shop will report for May and June?

Events	Balance Sheet					Income Statement
Beg Bal
1
2a
2b
3
4
5a
5b
End Bal

What is the amount of gross profit (margin) for May and June? $____________________