Question

Applying and Analyzing Inventory Costing Methods At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $20. A summary of purchases during the current period follows. During the period, Chen sold 2,800 units. Units Unit Cost Cost Beginning Inventory 1,000 $ 20 $ 20,000 Purchase #1 1,800 22 39,600 Purchase #2 800 26 20,800 Purchase #3 1,200 29 34,800 (a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period. Ending inventory balance $Answer 0

Answer 1

Answer:

Ending Inventory 31,900

COGS                  65,300

Explanation:

$\left[\begin{array}{cccc} Date& Cost& Units& Subtotal\\Beginning&20&100&2,000\\P1&22&1,800&39,600\\P2&26&800&20,800\\P3&29&1,200&34,800\\Total&&3,900&97,200\\\end{array}\right]$

Ending Inventory: 3,900 available - 2,800 = 1,100

As we use FIFO the 1,100 untis from ending inventory will be from the newest purchase:

1,100 units at 29 = 31,900

then we can calculate COGS as the difference between the cost of goods available for sale and the ending inventory

97,200 - 31,900 = 65,300 COGS