Response to the following problem:
Mesa Hardware Company, which uses a periodic inventory system, began 20X4 with 6,000 units of inventory that cost a total of $30,000. During 20X4, Mesa purchased merchandise on account as follows:
Purchase 1 (10,000 units costing)..........$60,000
Purchase 2 (20,000 units costing)..........140,000
At year-end, the physical count indicated 5,000 units of inventory on hand.
Required:
1. How many units did Mesa sell during the year? The sale price per unit was $10. Determine Mesa's sales revenue for the year.
2. Compute cost of goods sold by the FIFO method. Then determine gross profit for the year.