Answer:
Find detailed explanations below
Explanation:
Under the first-in-first-out inventory valuation method, the earlier stocks are sold first and the latest stocks remain in inventory.
In essence, the 200 units sold comprise of 100 units purchased on January 31 at $20 each and 100 units from purchases made on February 28 at $30 each as computed below
Cost of goods sold=(100*$20)+(100*$30)
Cost of goods sold=$5,000(the options are wrong)
The correct question for the options is provided below:
A company purchased 80 units for $20 each on January 31. It purchased 190 units for $25 each on February 28. It sold 190 units for $80 each from March 1 through December 31. If the company uses the first-in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system.)
A.
$6,350
B.
$4,350
C.
$1,600
D.
$4,750
Cost of goods sold=(80*$20)+(110*$25)
Cost of goods sold=$4,350
