Question

Shown below is activity for one of the products of Denver Office Equipment: January 1 balance,...

Shown below is activity for one of the products of Denver Office Equipment:

January 1 balance, 580 units @ $60 $34,800
Purchases:
January 10: 580 units @ $65
January 20: 1,040 units @ $68
Sales:
January 12: 900 units
January 28: 780 units


Required:
Compute the January 31 ending inventory and cost of goods sold for January, assuming Denver uses FIFO and a periodic inventory system.

Homework Answers

Answer #1

As per FIFO (First-In-First-Out) method, the units which were purchased at the earlier tile will be sold first.

As per given information,

Particulars Units
Opening Inventory 580
(+) Purchases on Jan 10 580
Total 1160
(-)Sales on Jan 12 900
Remaining Units 260
(+) Purchases on Jan 20 1040
Total 1300
(-) Sales on Jan 28 780 (260 units of Remaining units - I and 520 units of Purchases made on Jan 20)
Closing Inventory 520
Ending Inventory of 520 units is of Purchases made on Jan 20
Cost of Goods sold
Particulars Units Rate Amount
Sales on Jan 12 580 60 34800
Sales on Jan 12 320 65 20800
Sales on Jan 28 260 65 16900
Sales on Jan 28 520 68 35360
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