Question

Chase Co. uses the perpetual inventory method. The inventory records for Chase reflected the following Jan 1 Beginning inventory 2,000 units @ $ 5.70 Jan 12 Purchase 2,100 units @ $ 5.50 Jan 18 Sales 2,200 units @ $ 7.20 Jan 21 Purchase 2,000 units @ $ 5.80 Jan 25 Purchase 1,800 units @ $ 5.60 Jan 31 Sales 2,150 units @ $ 7.20 Assuming Chase uses a FIFO cost flow method, the cost of goods sold for the sales transaction on January 31 is:

Answer 1

Date	Purchases	Sales	Balance
Jan 1	Beginning inventory		2,000 *$5.7 = $11,400
Jan 12	2,100 *$5.5 = $11,550		2,100 *$5.5 = $11,550
Jan 18		2,000*$5.7 = $11,400 200 *$5.5 = $1,100	1,900*$5.5 = $10,450
Jan 21	2,000*$5.8 = $11,600		1,900*$5.5 = $10,450 2,100 units*$5.5 = $11,550
Jan 25	1,800*$5.6 = $10,080		1,900*$5.5 = $10,450 2,100 units*$5.5 = $11,550 1,800*$5.6 = $10,080
Jan 31		1,900*$5.5 = $10,450 250*$5.5 = $1,375	1,850*$5.5 = $10,175 1,800*$5.6 = $10,080

Cost of goods sold for sales transaction on Jan 31 is $20,255 ($10,175+10,080)