Question

M7-20 to 22 (Supplement 7A) Calculating Cost of Goods Sold and Ending Inventory under Perpetual FIFO, LIFO, and Weighted Average Cost [LO 7-S1]
In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order:

(1) 350 units at $4 on January 1,
(2) 650 units at $6 on January 8, and
(3) 760 units at $7 on January 29.

Assuming 1,060 units are on hand at the end of the month.

Calculate the cost of goods available for sale, cost of goods sold, and ending inventory under the FIFO. Assume perpetual inventory system and sold 700 units between January 9 and January 28. (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

cost of goods available for sale: $ 5,300

cost of goods sold : $3,500

ending inventory : $7,100

Explanation:

FIFO is an Inventory Management System that Sales the Oldest Stock first followed by the recent stock acquired.

cost of goods available for sale:

January 1 : 350×$4.00 =  $1,400

January 8: 650×$6.00 = $3,900

Total                                $ 5,300

cost of goods sold :

January 9 and January 28 : 350 × $4.00 = $1,400

                                            : 350 × $6.00 = $2,100

Total                                                             = $3,500

ending inventory :

January 31 : 300 × $6.00 = $1,800

                 :  760 × $7.00 = $5,300

Total                                  = $7,100