Question

Determine the cost of goods sold for the transaction on October 25 using the perpetual inventory system and the FIFO method. Date Item Units Cost Total Beginning inventory 5 $10 $50 October 4 Purchase 8 11 88 October 8 Sale 6 October 20 Purchase 15 12 180 October 25 Sale 12 a.$138 b.$180 c.$144 d.$137\

Answer 1

Answer:

D. $137

Explanation:

Using FIFO method, that is first in, first out

After Sale on October 8 we have 7 unit left in the inventory which cost $77

A new purchase was made for 15 units at $12 per unit on October 20, totaling current inventory in unit to 21 unit.

Therefore

Sale on October 25 of 12 unit

= 7 units at $77 + 5 units at $(5 × 12)

= 77 + 60

= $137