Chapter6

E6-20A. (Learning Objective 3: Measuring gross profit—FIFO vs. LIFO; Falling prices) Suppose a Waldorf store in Atlanta, Georgia, ended November 20X6 with 800,000 units of merchandise that cost an average of $5 each. Suppose the store then sold 600,000 units for $5.2 million during December. Further, assume the store made two large purchases during December as follows: Dec 11 200,000 units @ $4.00 24 500,000 units @ $3.00 $ 800,000 $1,500,000 Requirements 1. At December 31, the store manager needs to know the store’s gross profit under both FIFO and LIFO. Supply this information. 2. What caused the FIFO and LIFO gross profit figures to differ?