Answer: $656
Explanation:
Beginning inventory = 200 * $5 = $1000
Purchases(1/15) = 100 * $5.30 = $530
Purchases(1/28) = 100 * $5.50 = $550
Total available units = (200 + 100 + 100) = 400
Total units sold = (total available units - ending inventory)
= 400 - 120 = 280 units
Therefore, according to the First-in, First-out inventory method, goods are sold based on how it was purchased, that is cost of goods sold is based on or associated with the cost of the first inventory purchased until the units of the inventory is exhausted. Then we move to the next inventory.
Therefore, units sold is 240
First 200 units sold = $5 per unit =
200 × $5 = $1000
Next 80 units sold = $5.30 per unit =
80 × $5.30 = $424
Therefore, ending inventory :
(100 - 80) × $5.30 = $106
100 × $5.50 = $550
Ending inventory = $(106 + 550) = $656
