Question

Date Transaction Number of Units Unit Cost/Price Jan. 1 Beginning inventory 500 $ 10 Feb. 25 Sale 300 20 May 21 Purchase 400 12 Jul. 15 Purchase 500 15 Dec. 10 Sale 800 20 All purchase/sale transactions are made on credit. The company uses the FIFO method and perpetual inventory system to record transactions. The entry to record the transaction on December 10 will involve a debit to Cost of Goods Sold for _____.

Answer 1

$9,800

Step-by-step explanation:

As for the information provided,

Under FIFO method the goods which are bought first are sold first.

Therefore, goods sold on 25 Feb will be from beginning inventory.

Thus, balance from beginning inventory after such sale = 500 - 300 units = 200 units @ $10

May 21 purchase 400 units @ $12

Jul 15 purchase 500 units @ $15

Therefore sale of 800 units on 10 December will be as follows:

200 units @ $10 = $2,000

400 units @ $12 = $4,800

200 units @ $15 = $3,000

Total cost of goods sold = $9,800