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Using the FIFO perpetual results for June (19 units sold at $10 each; cost of merchandise sold $85), what is the gross profit?
A$92
B$99
C$105
D$190
Answer & Solution
Correct answer: C. $105
1. Total sales = 19 units sold $\times \$10 = \$190$.
2. Gross profit = sales - cost of merchandise sold = $\$190 - \$85$.
3. Gross profit = $\$105$.
4. Rule out $\$92$: that is the LIFO gross profit for the same period.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.1.1 "Perpetual Inventory System", p.116_
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