Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to cost of goods sold using FIFO. Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 320 units @ $17 5 Purchase 305 units @ $19 10 Sales 225 units @ $27 15 Purchase 185 units @ $20 24 Sales 175 units @ $28

Answer 1

Cost assigned to cost of goods sold using FIFOS 6,960 Working Notes: Cost of goods sold under First-In, First-Out(FIFO) Particulars Units Unit Cost Beginning Inventory May. 1 225 S 17 $ Beginning Inventory May. 1 95 $ 17 $ Purchases May. 5 80S 19 1 400 $ Total 3.825 1,615 1.520 6,960 Ending Inventory = (305-80)*$19+185*$20 = $7,975 Note: This Method is used to calculate the value of inventory on hand at the end of an accounting period and the cost of goods sold during the period. This method assumes that inventory purchased or manufactured first is sold first and newer inventory remains unsold. the actual flow of inventory may not exactly match the first-in. first-out pattern.