Question

Assume Baxter Manufacturing begins January with 11 units of inventory that cost $12 each. During January, the following purchases and goods sold were:

Jan 5
Purchased 8 units at $14
7
Sold 12 units
15
Purchased 6 units at $16
30
Sold 15 units
Using the FIFO inventory costing method and the perpetual system, how much is Costs of Goods Sold for the sale of January 7?

Answer 1

The Cost of Goods Sold for January 7 using the FIFO method and perpetual inventory system is $14.

Step-by-step explanation:

To calculate the Cost of Goods Sold using the FIFO method and perpetual inventory system, we need to determine the cost of the units sold on January 7. According to the FIFO method, the units sold will be the oldest units in inventory.

On January 5, 8 units were purchased at $14 each, making the total cost of $112. On January 7, 12 units were sold. Since there were only 11 units in inventory on January 1, the remaining 1 unit was from the purchase on January 5. Therefore, the Cost of Goods Sold for January 7 is $14.

Answer 2

COGS (Jan 7)= $146

Step-by-step explanation:

Giving the following information:

Jan 1: 11 units for $12 each.

Jan 5: Purchased 8 units at $14

Jan 7: Sold 12 units

Jan 15: Purchased 6 units at $16

Jan 30: Sold 15 units

Under a perpetual inventory system, the cost of goods sold gets accounted as they occur:

FIFO= first-in, first-out

COGS (Jan 7)= 11*12 + 1*14= $146