Question

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.

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