Response to the following problem:
Analyzing inventory transactions
McKinley, Inc., inventory records for a particular development program show the following at October 31:
|
Oct. 1
|
Beginning inventory
|
5 units @ 160
|
=
|
$ 800
|
|
15
|
Purchase
|
11 units @ 170
|
=
|
1,870
|
|
26
|
Purchase
|
5 units @ 180
|
=
|
900
|
At October 31, 8 of these programs are on hand. Journalize for McKinley:
1. Total October purchases in one summary entry. All purchases were on credit.
2. Total October sales and cost of goods sold in 2 summary entries. The selling price was $500 per unit and all sales were on credit. McKinley uses the FIFO inventory method.
3. Under FIFO, how much gross profit would McKinley earn on these transactions? What is the FIFO cost of McKinley's ending inventory?