You have the following information for Blossom Company. Blossom Company uses the periodic method of accounting for its inventory transactions. Blossom Company only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 Beginning inventory 146 diamonds at a cost of $317 per diamond. March 3 Purchased 189 diamonds at a cost of $340 each. March 5 Sold 179 diamonds for $614 each. March 10 Purchased 324 diamonds at a cost of $399 each. March 25 Sold 408 diamonds for $681 each. (a) Your Answer Correct Answer Your answer is partially correct. Assume that Blossom Company uses the specific identification cost flow method. Demonstrate how Blossom Company could maximize its gross profit for the month by specifically selecting which diamonds to sell on March 5 and March 25. To maximize gross profit, Blossom Company should sell the diamonds with the lowest (2) Demonstrate how Blossom Company could minimize its gross profit for the month by selecting which diamonds to sell on March 5 and March 25. To minimize gross profit, Blossom Company should sell the diamonds with the highest v cost. Cost of goods sold to maximize gross profit 211,090 Cost of goods sold to minimize gross profit 218,969 eTextbook and Media Solution List of Accounts (b) Assume that Blossom Company uses the FIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would Blossom Company report under this cost flow assumption? Cost of goods sold $ Gross profit $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Transcribed Image Text:You have the following information for Blossom Company. Blossom Company uses the periodic method of accounting for its inventory transactions. Blossom Company only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 Beginning inventory 146 diamonds at a cost of $317 per diamond. March 3 Purchased 189 diamonds at a cost of $340 each. March 5 Sold 179 diamonds for $614 each. March 10 Purchased 324 diamonds at a cost of $399 each. March 25 Sold 408 diamonds for $681 each. (a) Your Answer Correct Answer Your answer is partially correct. Assume that Blossom Company uses the specific identification cost flow method. Demonstrate how Blossom Company could maximize its gross profit for the month by specifically selecting which diamonds to sell on March 5 and March 25. To maximize gross profit, Blossom Company should sell the diamonds with the lowest (2) Demonstrate how Blossom Company could minimize its gross profit for the month by selecting which diamonds to sell on March 5 and March 25. To minimize gross profit, Blossom Company should sell the diamonds with the highest v cost. Cost of goods sold to maximize gross profit 211,090 Cost of goods sold to minimize gross profit 218,969 eTextbook and Media Solution List of Accounts (b) Assume that Blossom Company uses the FIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would Blossom Company report under this cost flow assumption? Cost of goods sold $ Gross profit $

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