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24 December, 06:14

Waterway Company uses a periodic inventory system. For April, when the company sold 450 units, the following information is available. Units Unit Cost Total Cost April 1 inventory 260 $29 $ 7,540 April 15 purchase 360 35 12,600 April 23 purchase 380 38 14,440 1,000 $34,580 Compute the April 30 inventory and the April cost of goods sold using the FIFO method

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  1. 24 December, 06:44
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    Ending inventory is $20,390

    Cost of goods sold = $14,190

    Explanation:

    Given:

    Unit sold in April = 450

    Beginning inventory = 260 units * $29 = $7,540

    Purchased on April 15 = 360 units * $35 = $12,600

    Now goods sold is 450 units. Since company follows FIFO, it will sell 260 units @ $29 first and then 450 - 260 = 190 units from goods purchased on April 15.

    Cost of goods sold = 7,540 + (190*35)

    = $14,190

    Closing inventory:

    April 15 purchase = 35 * (360 - 190)

    = $5,950

    April 23 purchase = 380*$38 = $14,440

    Total closing inventory = 14,440 + 5,950 = $20,390

    Cost of goods sold can be verified in the following manner:

    Total cost of goods available for sale = $34,580

    Ending inventory = $20,390

    Cost of goods sold = 34,580 - 20390

    = $141,90
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