Question

Multiple-Choice Exercise 6-16

Morgan Inc. has the following units and costs for the month of April:

	Units Purchased at Cost	Units Sold at Retail
Beginning inventory, April 1	1,200 units at $25
Purchase 1, April 9	1,500 units at $28
Sale 1, April 12		2,400 units at $45
Purchase 2, April 22	1,000 units at $30

If Morgan uses a periodic inventory system, what is the cost of goods sold under FIFO at April 30?

a. $32,800

b. $69,200

c. $38,400

d. $63,600

Answer 1

FIFO ( First in First Out ) is a inventory system where there is assume that inventory purchased first is sold first and on the basis of this inventory is valued.

So On April 1 there is opening inventory of 1200 units valued at $25 and there is purchases on April 9 of 1500 units at $28 and there is another purchases of 1000 units at $30

Then there is sales on April 12 of 2400 units at $ 30

So in FIFO system as explained above the inventory first purchased is sold first so the sales will occupy 1200 units of opening and remaining 1200 units of Purchases made on April 9

So Cost of Goods Sold Will be = 1200*$25 + 1200*$28

= $63600

So the Correct Answer is Option d $63600 as solved above