Question

20-21. During 2018, Liberty Company has the following inventory transactions. Date Transaction Units Total Cost $4,400 8,200 7,560 Cost Beginning inventory Jan. 1 11 $400 Jan. 8 Purchase 20 410 Jan. 15 Purchase 18 420 Jan. 19 Sales 44 Required: Using FIFO with a periodic inventory system, calculate cost of goods sold, ending inventory

Answer 1

Solution:
	Cost of goods sold		18,060
	Ending Inventory		2,100
Working Notes:
	FIFO
	Particulars		Opening Balance			Purchase			Sale			Closing
	Date	Transaction	Units	Rate	Amount	Units	Rate	Amount	Units	Rate	Amount	Units	Rate	Amount
	Jan. 1	Beginning inventory	11.00	400.00	4,400.00	-	-	-	-	-	-	11.00	400.00	4,400.00
	Jan. 8	Purchase	-	-	-	20.00	410.00	8,200.00	-	-	-	11.00	400.00	4,400.00
												20.00	410.00	8,200.00
	Jan. 15	Purchase	11.00	400.00	4,400.00	-	-	-				11.00	400.00	4,400.00
			20.00	410.00	8,200.00							20.00	410.00	8,200.00
						18.00	420.00	7,560.00				18.00	420.00	7,560.00
	Jan. 19	Sales	11.00	400.00	4,400.00				11.00	400.00	4,400.00
			20.00	410.00	8,200.00				20.00	410.00	8,200.00
			18.00	420.00	7,560.00				13.00	420.00	5,460.00	5.00	420.00	2,100.00
						Total Cost of goods sold			44.00		18,060.00	5.00	420.00	2,100.00
Notes:	Under FIFO method goods which comes in system first are sold first , hence when 44 units sold it is sold out of 11 units of beginning , 20 units of Jan 8 and balance 13 units from purchase of Jan. 15 and we left with Ending inventory of 5 units from Jan. 15 purchase											Ending inventory
Hence			11 x 400	4400
	5 x 420	2100	20 x 410	8200
	Ending Inventory	2100	13 x 420	5460
		Cost of goods sold		18060
Please feel free to ask if anything about above solution in comment section of the question.