Crane Company sells leather saddles and equipment for horse enthusiasts. Crane uses the perpetual inventory system. The following schedule relates to the company's inventory for the month of May: May 1 5 9 13 24 27 (a1) 30 Beginning inventory Sale Purchase Purchase Sale Sale Purcha Cost of goods sold $ Gross margin Ending inventory $ 120 units $ 80 units 40 units 160 units 160 units 40 units 60 units Cost $42,000 $15,400 $67,200 Calculate Crane Company's cost of goods sold, gross margin, and ending inventory using FIFO. $27,720 Sales $36,400 $78,400 $22,400

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…