Question

Smalley, Inc., purchased items of inventory as follows. Jan. 4 100 units @ $2.10 Jan. 23 120 units @ $2.25 Smalley sold 50 units on January 28. Compute the cost of goods sold for the month under the FIFO inventory method.

Answer 1

The answer is$105

Step-by-step explanation:

FIFO is first in first out. It means the inventory that was purchased first will be sold or go out first.

Purchases:

Jan. 4. 100 units @ $2.10

Jan. 23 120 units @ $2.25

Sales:

January 28 sold 50 units

There are purchases of 220 in total and sales of 50 units. According to FIFO, this means the 50units that was sold will be from the purchase of Jan. 4. at $2.10

Cost of goods sold is

50 units x $2.10

=$105