Question

Sandra’s Purse Boutique has the following transactions related to its top-selling Gucci purse for the month...

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-

Homework Answers

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.

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