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12 August, 12:15

Grays Company has inventory of 16 units at a cost of $11 each on August 1. On August 3, it purchased 26 units at $10 each. 18 units are sold on August 6. Using the perpetual FIFO inventory method, what amount will be reported as cost of goods sold for the 18 units that were sold

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  1. 12 August, 12:44
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    Cost of goods sold is $196

    Explanation:

    Using FIFO inventory sold are valued at the price of the most earliest stock in inventory.

    The 16 units would be valued at $11 per one while the remaining 2 units would be valued at price of the purchase made on August 3 which cost $10 each

    costs of goods sold = ($11*16) + ($10*2)

    =$176+$20=$196

    The costs of goods sold would be $196 if FIFO method of inventory valuation is used
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