Question

Beginning inventory, purchases, and sales for an inventory item are as follows: Sep. 1 Beginning Inventory 34 units $16 5 Sale 20 units 17 Purchase 37 units $19 30 Sale 35 units Assuming a perpetual inventory system and the first-in, first-out method: a. Determine the cost of the goods sold for the September 30 sale. b. Determine the inventory on September 30.

Answer 1

Solution a:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Sep	34	$16.00	$544.00	0	$0.00	$0.00	0	$0.00	$0.00	34	$16.00	$544.00
5-Sep	34	$16.00	$544.00	0	$0.00	$0.00	20	$16.00	$320.00	14	$16.00	$224.00
17-Sep	14	$16.00	$224.00	37	$19.00	$703.00	0	$0.00	$0.00	14	$16.00	$224.00
										37	$19.00	$703.00
30-Sep	14	$16.00	$224.00	0	$0.00	$0.00	14	$16.00	$224.00	16	$19.00	$304.00
	37	$19.00	$703.00				21	$19.00	$399.00
Total							55		$943.00	16		$304.00

Cost of goods sold for the sep 30 sale = $224 + $399 = $623

Solution b:

Inventory on Sep 30 = $304