Question

Sandra’s Purse Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sandra's Purse Boutique uses a periodic inventory system.

Date			Transactions	Units				Unit Cost				Total Cost
October	1		Beginning inventory		6			$	850				$	5,100
October	4		Sale		4
October	10		Purchase		5				860					4,300
October	13		Sale		3
October	20		Purchase		4				870					3,480
October	28		Sale		7
October	30		Purchase		8				880					7,040
													$	19,920

2. Using FIFO, calculate ending inventory and cost of goods sold at October 31.

Ending event-

cost of good sold-

Answer 1

Under FIFO method goods purchased first are sold first, therefore cost of goods sold will be , sale made on October 4th will be from the beginning inventory of 4 units, sale made on October 13th will be made from 2 units from beginning inventory and 1 unit from purchase made on October 10th. Sale made on October 28th will be made from 4 units from purchase made on October 10th and 3 units from purchase made on October 20th.

Cost of goods sold

= 4*850 + 2*850 + 1*860 + 4*860 + 3*870

= 3,400 + 1,700 + 860 + 3,440 + 2,610

= $12,010

Ending inventory will be from 1 unit from purchase made on October 20th and 8 units from purchase made on October 30th.

= 1*870 + 8*880

= 870 + 7,040

= $7,910.

If you find the answer helpful please upvote.