Question

Waterway Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 260 $29 $ 7,540 April 15 purchase 360 35 12,600 April 23 purchase 380 38 14,440 1,000 $34,580 Compute the April 30 inventory and the April cost of goods sold using the FIFO method

Answer 1

Answer:

Ending inventory is $20,390

Cost of goods sold = $14,190

Explanation:

Given:

Unit sold in April = 450

Beginning inventory = 260 units × $29 = $7,540

Purchased on April 15 = 360 units × $35 = $12,600

Now goods sold is 450 units. Since company follows FIFO, it will sell 260 units @ $29 first and then 450 - 260 = 190 units from goods purchased on April 15.

Cost of goods sold = 7,540 + (190×35)

                                 = $14,190

Closing inventory:

April 15 purchase = 35×(360 - 190)

                            = $5,950

April 23 purchase = 380×$38 = $14,440

Total closing inventory = 14,440 + 5,950 = $20,390

Cost of goods sold can be verified in the following manner:

Total cost of goods available for sale = $34,580

Ending inventory = $20,390

Cost of goods sold = 34,580 - 20390

                              = $141,90