1.4 CBA 4 Financial Statements

Registered Posts: 17 Dedicated contributor 🦉
Please can someone help me work this out.

What is the companies gross profit for year ended 31 20X0

1 Jan Opening inventory 500 @ 2.80 = 1400
8 May Purchased 1000 @ 3.00 = 3000
11 Aug Purchased 600 @ 3.60 = 2160
29 Nov Purchased 1900 @ 4.20 = 7980

Answer is 7660 but can't seem to get it, or remember how to do it!
Probably one of the easiest questions on the paper but useles when it comes to FIFO/LIFO but dont think it helps when its on a computer and not in a table infront of you!

Thanks
ang

• Registered Posts: 40 Epic contributor 🐘
FIFO. First In First Out.

So to find the Gross Profit = Revenue - Cost of Sales

Revenue = 3000 units x £6.00 per unit = £18,000

Cost of Sales:
So using the FIFO method we are using the Opening Inventory unit cost first.
Sold 3000 units so
(500 x £2.80) + (1,000 x £3.00) + (600 x £3.60) + (900 x 4.20) = £10,340

Rev - Cos
£18,000-£10,340 = £7,660

Comprende?
• Registered Posts: 40 Epic contributor 🐘