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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.)

Answer 1

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