Question

Perpetual Inventory Using FIFO

The following units of a particular item were available for sale during the calendar year:

Jan. 1	Inventory	4,000 units at $40
Apr. 19	Sale	2,400 units
June 30	Purchase	4,400 units at $45
Sept. 2	Sale	5,000 units
Nov. 15	Purchase	2,100 units at $46

The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

Answer 1

Perpetual FIFO first in first out the goods purchased earlier are deemed to be sold first

Date	purchase	cost of goods sold	Ending inventory
	Qty	unit cost	Total cost	Qty	unit cost	Total cost	Qty	unit cost	Total cost
Jan 1	4000	40	$160000
April 19				2400	40	$96000	1600(4000-2400)	40	$64000
June 30	4400	45	$198000				1600	40	$64000
							4400	45	$198000
Sep 2				1600	40	$64000	1000(4400-3400)	45	$45000
				3400	45	$153000
Nov 15	2100	46	$96600				1000	45	$45000
							2100	46	$96600
Total			$454600			313000			$141600

Cost of goods sold = $313000

Ending inventory =$141600