Question

Easton Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2019: Date Activity Quantity Unit Price 5/1 Beginning Inventory 100 $10 5/5 Purchase 210 $12 5/15 Purchase 300 $14 5/25 Purchase 320 $16 Sales were 460 units at $20. Using the FIFO method, determine the dollar value of Cost of Goods Sold for the month of May.

Answer 1

Ans:

FIFO, Cost of goods sold:

Units sold= 460

(i)Units from beginning inventory of 100@$10 = 100,

Cost =1000*10 = $1,000

(ii)Units from 5/5 Purchases of 210@$12 = 210,

Cost = 210*12 = $2,520

(iii)Units from 5/15 purchases of 300@$14 = 150,

(460-100-210=150)

Cost = 150*14 = $2,100

By adding cost of (i,ii,iii)

Cost of goods sold = $1,000+$2,520+$2,100

Cost of goods sold = $5,620

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