Top Light Company uses a perpetual inventory system. The company began 2014 with 1,000 lamps in inventory at a cost of $12 per unit. During 2014, Top Light had the following purchases and sales of lamps:
February 15..........................Purchased................2,000 units @ $18 per unit
April 24.....................................Sold................2,500 units @ $30 per unit
June 6.................................Purchased................3,500 units @ $23 per unit
October 18.................................Sold................2,000 units @ $33 per unit
December 4..........................Purchased................1,400 units @ $26 per unit
All purchases and sales are on account.
Instructions
(a) Calculate the cost of goods sold and ending inventory using average. (Hint: Round the average cost per unit to three decimal places.)
(b) Prepare journal entries to record the June 6 purchase and the October 18 sale.
(c) Calculate gross profit for the year.