Question

Cullumber Company uses a periodic inventory system. For April, when the company sold 550 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 250 $14 $ 3,500 April 15 purchase 420 17 7,140 April 23 purchase 330 18 5,940 1,000 $16,580 Compute the April 30 inventory and the April cost of goods sold using the FIFO method. Ending inventory Cost of goods sold

Answer 1

Solution:

Total units available for sale = 1000 units

Units sold = 550 units

Units in Ending Inventory = 1000 - 550 = 450 units

Under FIFO method, ending inventory consists of last purchases and units sold are from earlier purchases.

Ending Inventory cost = 330 units from April 23 purchases + 120 units from April 15 purchases =

(330 units * $18) + (120* $17) = $7,980

Cost of Goods sold = 250 units from April 1 Inventory + 300 units from April 15 purchases

= 250 * $14 + 300 *$17 = $8,600