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27 January, 08:41

During the year, Wright Company sells 415 remote-control airplanes for $100 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 50 $ 75 $ 3,750 May. 5 Purchase 215 78 16,770 Nov. 3 Purchase 165 83 13,695 430 $ 34,215 Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO.

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  1. 27 January, 08:49
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    See explanation section.

    Explanation:

    We know, first in first out (FIFO) inventory system shows that items were sold those were purchase earlier.

    Cost of good sold under FIFO method,

    Jan. 1 Beginning inventory 50 units * $75 = $3,750

    May. 5 Purchase 215 units * $78 = $16,770

    Nov. 3 Purchase 150 units * $83 = $12,450

    Cost of good sold 415 units = $32,970

    Ending inventory = Total inventory - cost of good sold

    Ending inventory = 430 units - 415 units = 15 units

    Cost of inventory = Total cost - Cost of good sold

    Cost of inventory = $34,215 - $32,970 = $1,245
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