During the year, TRC Corporation has the following inventory transactions. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 44 $ 36 $ 1,584 Apr. 7 Purchase 124 38 4,712 Jul. 16 Purchase 194 41 7,954 Oct. 6 Purchase 104 42 4,368 466 $ 18,618 For the entire year, the company sells 413 units of inventory for $54 each. Required: 1. Using FIFO, calculate ending inventory, cost of goods sold, sales revenue, and gross profit.

TRC Corporation

Calculations, using FIFO:

a) Ending Inventory:

Ending Inventory in units = Units available for sale minus Units sold

Ending Inventory in units = 466 - 413 = 53 units

Ending Inventory value = Units x FIFO cost of last purchase = 53 x $42 = $2,226

b) Cost of goods sold:

Cost of goods sold = Beginning Inventory + Purchases - Ending Inventory

Cost of goods sold = $1,584 + 17,034 - 2,226 = $16,392

c) Sales Revenue:

Sales Revenue = Units sold x Selling price = 414 x $54 = $22,302

d) Gross Profit:

Gross Profit = Sales Revenue minus Cost of goods sold

Gross Profit = $22,302 - $16,392 = $5,910

Explanation:

a) Summary of Inventory Transactions:

Date     Transaction              Number of Units   Unit Cost     Total Cost

Jan. 1     Beginning inventory     44                     $ 36              $ 1,584

Apr. 7     Purchase                     124                        38                  4,712

Jul. 16    Purchase                     194                         41                 7,954

Oct. 6    Purchase                     104                         42                4,368

b) Cost of goods available       466                                         $ 18,618

c) Sales                                      413                     $ 54           $ 22,302

d) Dec. 31 Ending Inventory      53                         42             $ 2,226

e) The FIFO (First-in, First-out) inventory method assumes that goods sold are from earlier inventory units, unlike Last-in, First-out (LIFO).  This means that beginning and earlier purchased inventory units are sold first before the latest purchases. Using the FIFO method, the ending inventory is valued at the cost of the most recent inventory purchases.

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