During 2021, a company sells 310 units of inventory for $91 each. The company has the following inventory purchase transactions for 2021: Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 65 $ 62 $ 4,030 May 5 Purchase 168 63 10,584 Nov. 3 Purchase 186 65 12,090 419 $ 26,704 Calculate ending inventory and cost of goods sold for 2021 assuming the company uses FIFO.

Question

Sierra Evans

Business

8 December, 19:52

During 2021, a company sells 310 units of inventory for $91 each. The company has the following inventory purchase transactions for 2021: Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 65 $ 62 $ 4,030 May 5 Purchase 168 63 10,584 Nov. 3 Purchase 186 65 12,090 419 $ 26,704 Calculate ending inventory and cost of goods sold for 2021 assuming the company uses FIFO.

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Gaven Jacobson · Answer 1

Ending inventory (EI) = 19,619

Cost of goods sold (COSG) = 7,085

Explanation:

To calculate COSG using FIFO, we have to take the first units purchased and then take the next ones purchased.

In this case:

65 units * $62 = 4,030 168 units * $63 = 10,584 77 units * $ 65 = 5.005 COSG 310 units = 19,619

The EI will be the remaing units:

EI = 109 units * $65 = 7,085

The Initial Inventoriy company and purchases total: (4,030 + 10,584 + 12,090) 26,704. That is the total amount of inventory. Those units are sold or are in the EI, so COSG and EI must total the same amount: 19,619 + 7,085 = 26,704.