Question

Using the FIFO method, calculate the cost of ending inventory and cost of goods sold for Carden Corporation.

Quantity. Unit Cost. Total
beginning inventory 70 3.00 210
purchases 130 7.00 910
Goods available for sale 200
Ending Inventory 60
Cost of goods sold 140
The cost of ending inventory is _______
The cost of goods sold is ___________

Answer 1

The cost of ending inventory for Carden Corporation using FIFO is $420, and the cost of goods sold is $700.

Step-by-step explanation:

Using the First-In, First-Out (FIFO) inventory method, we can calculate the cost of ending inventory and the cost of goods sold for the Carden Corporation. Under FIFO, the oldest inventory costs are assigned to the cost of goods sold first, which means that the cost of the newer inventory is assigned to the ending inventory.

To find the cost of ending inventory, we take the 60 units remaining and calculate the costs based on the most recent purchase price of $7.00. Thus, 60 units × $7.00 equals $420. The cost of goods sold (COGS) would be the cost of the 140 units that were sold, calculated by using the cost of the starting inventory first ($3.00/unit for 70 units) and then the remaining 70 units from the purchases ($7.00/unit), totaling $210 + $490 = $700.