Question

Beginning inventory, purchases, and sales for an inventory item are as follows:

Sep. 1	Beginning Inventory	24	units	@	$15
5	Sale	14	units
17	Purchase	26	units	@	$17
30	Sale	25	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

We are following perpetual inventory system.

A. Sale in Sep 30 is 25 units.

This 25 units consists of 10 units from opening inventory and remaining 15 units from purchase in Sep 17. So as we are following perpetual inventory system, cost of this 25 units will be as follow,

(10 x $15) + (15 x $17)

= 150+255

Cost of goods sold in Sep 30 sale = $ 405.

B.We have total 50 units out of 39 units are sold out. So we have 11 units in our hand as closing inventory. This 11 units consists of units purchased in Sep 17 at $ 17 per unit.

So, value of closing stock as on Sep 30 will be

= 11 x $ 17

Closing stock value = $ 187.

SUMMARY:

A. Cost of goods sold for Sep 30 sale = $ 405.

B. Closing inventory as on Sep 30. = $ 187.