Question

# Required information [The following information applies to the questions displayed below.] The following are the transactions...

Required information

[The following information applies to the questions displayed below.]

The following are the transactions for the month of July.

 Units Unit Cost Unit Selling Price July 1 Beginning Inventory 59 \$ 10 July 13 Purchase 295 13 July 25 Sold (100 ) \$ 15 July 31 Ending Inventory 254

Calculate cost of goods available for sale and ending inventory, then sales, cost of goods sold, and gross profit, under FIFO. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places and your final answers to nearest whole dollar amount.)

FIFO Method:-

Under FIFO method, the goods purchased first are sold first and ending inventory includes goods purchased last.

Cost of goods available for sale = Cost of Beginning Inventory+Total purchases

= (59 units*\$10 per unit)+(295 units*\$13 per unit)

= \$590+\$3,835 = \$4,425

Ending inventory under FIFO will be from purchases made on July 13 at the cost of \$13 per unit.

Cost of Ending Inventory = Units in Ending Inventory*Purchase cost per unit

= 254 units*\$13 per unit = \$3,302

Sales Revenue = Units sold*Sale price per unit

= 100 units*\$15 per unit = \$1,500

100 units sold will include 590 units of  beginning inventory at \$10 per unit and remaining units 41 units (100-59) from purchases made on July 13 at \$13 per unit.

Cost of goods sold = (59 units*\$10)+(41 units*\$13)

= \$590+\$533 = \$1,123

Gross Profit = Sales revenue - Cost of goods sold

= \$1,500 - \$1,123 = \$377

 Cost of goods available for sale 4,425 Ending Inventory 3,302 Sales 1,500 Cost of goods sold 1,123 Gross profit 377

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