Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to the ending inventory using FIFO.

Answer 1

To determine the cost assigned to the ending inventory using FIFO in a periodic inventory system, list the purchases and sales in chronological order, calculate the cost of goods sold (COGS) by summing the costs of the earliest purchases until you reach the quantity sold, and subtract the COGS from the total cost of the purchases to determine the cost of the ending inventory.

Step-by-step explanation:

In a periodic inventory system, the cost of ending inventory is determined using the FIFO (First-In, First-Out) method. This means that the cost assigned to the ending inventory is based on the cost of the oldest purchases. To calculate the cost assigned to the ending inventory, you need to determine the cost of the inventory sold first and then subtract it from the total cost of the purchases. The remaining cost represents the cost of the ending inventory.

Here's how you can calculate the cost assigned to the ending inventory using FIFO:

1. List the purchases and sales in chronological order, starting with the earliest purchase.
2. Calculate the cost of goods sold (COGS) by summing the costs of the earliest purchases until you reach the quantity sold.
3. Subtract the COGS from the total cost of the purchases to determine the cost of the ending inventory.