Question

Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales for Item PK95 are January 1 Inventory 39 units @ $24 Sale 30 units 13 Purchase 41 units @ $28 28 Sale 16 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on January 28 and (b) the inventory on January 31. a. Cost of merchandise sold on January 28 EN b. Inventory on January 31

Answer 1

Solution:

a) Cost of merchandise sold on January 28th = $ 216 + $ 196 = $ 412

b) Inventory on 31st January = $ 952.

Date	Purchases			Cost of Goods Sold			Inventory on Hand
	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
Jan. 1							39	$          24	$        936
Jan. 9				30	$          24	$        720	9	$          24	$        216
Jan. 13	41	$          28	$    1,148				9	$          24	$        216
							41	$          28	$    1,148
Jan. 28				9	$          24	$        216	34	$          28	$        952
				7	$          28	$        196
Totals	41		$    1,148	46		$    1,132	34	28	952

Note:

1) As per FIFO, goods purchased earlier are sold first.