Suppose a Target store in Chicago, Illinois, ended November 2018 with 500,000 units of merchandise that cost $8.00 each. Suppose the store then sold 110,000 units for $960,000 during December. Further, assume the store made two large purchases during December as follows:

Requirements

1. Calculate the store’s gross profit under FIFO and LIFO at December 31.

2. What caused the FIFO and LIFO gross profit figures to differ?

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35,000 units @ $6.10 50,000 units @ $5.20 $213,500 $260,000 Dec 8 28