(Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units ofmerchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 duringFebruary. Further, assume the store made two large purchases during February as follows:Feb 10 10,000 units @ $3.10 = $31,00021 25,000 units @ $2.20 = $55,000Requirements1. Calculate the store’s gross profit under both FIFO and LIFO at February 28.2. What caused the FIFO and LIFO gross profit figures to differ?
(Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units ofmerchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 duringFebruary. Further, assume the store made two large purchases during February as follows:Feb 10 10,000 units @ $3.10 = $31,00021 25,000 units @ $2.20 = $55,000Requirements1. Calculate the store’s gross profit under both FIFO and LIFO at February 28.2. What caused the FIFO and LIFO gross profit figures to differ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
(Learning Objective 2: Compare gross profit—FIFO vs. LIFO—falling prices)
Suppose a Walmart store in Fillmore, Missouri, ended January 2018 with 900,000 units of
merchandise that cost $5 each. Suppose the store then sold 50,000 units for $510,000 during
February. Further, assume the store made two large purchases during February as follows:
Feb 10 10,000 units @ $3.10 = $31,000
21 25,000 units @ $2.20 = $55,000
Requirements
1. Calculate the store’s gross profit under both FIFO and LIFO at February 28.
2. What caused the FIFO and LIFO gross profit figures to differ?
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