On May 1, Black Bear Company had 400 units of inventory on hand, at a cost of $4.00 each. The company uses a perpetual inventory system. All purchases and sales are on account. A record of inventory transactions for the month of May for the company is as follows:

Instructions
(a) Calculate the cost of goods sold and ending inventory using FIFO.
(b) Prepare journal entries to record the May 4 purchase and the May 3 and 16 sales.
(c) Calculate gross profit for May.

Transcribed Image Text:

Purchases Sales 1,300@$4.10 700 @ $4.40 500 @ $4.75 May 4 14 29 May 3 16 18 300 @ $7.00 1,000@ 7.00 400@ 7.50