Question

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales for Item HM46 are as follows:

August 1		Inventory	42 units @ $17
9		Sale	34 units
13		Purchase	35 units @ $19
25		Sale	13 units

Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on August 25 and (b) the inventory on August 31.

a. Cost of merchandise sold on August 25
b. Inventory on August 31

Answer 1

	Purchases	Cost of goods sold	Ending inventory
Date	Units	Unit cost	Total cost	Units	Unit cost	Total cost	Units	Unit cost	Total cost
Aug. 1							42	17	714
Aug. 9				34	17	578	8	17	136
Aug. 13	35	19	665				8	17	136
							35	19	665
Aug. 25				8	17	136
				5	19	95	30	19	570

·

a. Cost of merchandise sold on August 25	$231
b. Inventory on August 31	$570

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.