Question

Sergeant Pens maintains its mechanical pencil inventory using the perpetual inventory method. The inventory records for...

Sergeant Pens maintains its mechanical pencil inventory using the perpetual inventory method.

The inventory records for November follow:
Beginning inventory 40 units @ $5.10 each
November 13 purchase 60 units @ $5.60 each
November 26 sale 75 units @ $9 each

Using the FIFO inventory-costing method, how much will Sergeant Pens report as cost of goods sold for November?

Select one:

a. 495.00

b. 140.00

c. 400.00

d. 392.50

Business   Accounting   
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Answer #1

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Using the FIFO inventory-costing method, Sergeant Pens report as cost of goods sold for November as follow:

Date Purchases Sales Balance
Units Unit Cost   Total Units Unit Cost Total Units Unit Cost Total
Nov.1 40 $5.10 $204
Nov.13 60 $5.60 $336 40 $5.10 $204
60 $5.60 $336
Nov.26 40 $5.10 $204
35 $5.60 $196 25 $5.60 $140
Total 60 $336 75 $400 25 $140

Cost of good sold= Opening Stock +Purchase- Closing stock

=$204+$336-$140= $400

Hence, The correct option is c. $400

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