Question

During the year, Wright Company sells 415 remote-control airplanes for $100 each. The company has the following inventory purchase transactions for the year. Date Transaction Number of Units Unit Cost Total Cost Jan. 1 Beginning inventory 50 $ 75 $ 3,750 May. 5 Purchase 215 78 16,770 Nov. 3 Purchase 165 83 13,695 430 $ 34,215 Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO.

Answer 1

See explanation section.

Step-by-step explanation:

We know, first in first out (FIFO) inventory system shows that items were sold those were purchase earlier.

Cost of good sold under FIFO method,

Jan. 1 Beginning inventory 50 units × $75 = $3,750

May. 5 Purchase 215 units × $78 = $16,770

Nov. 3 Purchase 150 units × $83 = $12,450

Cost of good sold 415 units = $32,970

Ending inventory = Total inventory - cost of good sold

Ending inventory = 430 units - 415 units = 15 units

Cost of inventory = Total cost - Cost of good sold

Cost of inventory = $34,215 - $32,970 = $1,245