Question

Anton Co. uses the perpetual inventory method. Anton purchased 760 units of inventory that cost $7 each. At a later date the company purchased an additional 870 units of inventory that cost $9 each. If Anton uses the FIFO cost flow method and sells 1,150 units of inventory, the amount of cost of goods sold will be___________.

Answer 1

Answer:

Cost of goods sold = $8,830

Explanation:

Under the FIFO system , the principle used is that the first batch that arrives the store should be issued first.

Using the FIFO method of the perpetual inventory, the  1,150 units sold by Anton Co will be priced as follows:

760 units at a price of $7 = 760× $7= $5,320

Out of the 870 units of the second batch 390 will be used i.e 1150-760 = 390

390units at a price of $9 =390 × $9 = $3,510

Cost of goods sold =  $5,320+ $3,510

                               = $8,830

Answer 2

Answer:

Cost of goods sold = $8,830

Explanation:

Under the FIFO system , inventories are priced using the price of the oldest batch in the stock, after which the price of the next oldest batch and this is done in turn. It is based on the principle that the first batch that arrives the store should be issued first.

Using the FIFO method of the perpetual inventory, the  1,150 units sold by Anton Co will be priced as follows:

760 units at a price of $7 = 760× $7= $5,320

390units at a price of $9 =390 × $9 = $3,510

Cost of goods sold =  $5,320+ $3,510

                               = $8,830