Answer:
$800
Step-by-step explanation:
The FIFO (First In First Out) inventory valuation system seeks to ensure that there is an approximate flow of the goods in store.
It ensures that the first goods bought are the ones sold and is mostly applicable or useful for perishable items, such that the first ones bought are the ones sold.
I will explain this question using an excels sheet.
Purchases Sales Balance
Date Qty Price Amt Qty Price Amt Qty Amt
Sep 1 20 20 400 0 0 0 20 400
Sep 4 0 0 0 10 20 200 10 200
Sep 10 30 25 750 0 0 0 40 950
Sep 17 0 0 0 10 20 200
10 25 250 20 500
Sep 30
I am going to leave the last one for you to do yourself and see how I got the final answer of $800.
There is the column for purchases showing the goods bought, Sales showing goods sold and running balance when sales are made.
The most fundamental thing to keep in mind is that when sale is made, it must be removed from existing stock in inventory before moving to more recent goods bought.
This is evident on September 4th when there was a sale of 10 units.
Kindly note that the cost of goods sold will always be at the price of goods in inventory.
Whenever there is a purchase, the balance column will increase by the number of units and the cost of the goods. Whenever there is a sale, the balance column will reduce by the number of units and the cost of sale, which in this case is always the cost of purchase of units sold.
On Sept 17, you will notice that there was a sale of 20 units, but we had 10 units unsold from Sept 4th at $20 before we moved on to sell another 10 units from the most recent purchase at $25.
I believe with this explanation, there is no question under FIFO valuation method you will not be able to answer....
Keep the flag flying