Question

The following are the transactions for the month of July:

Units Unit Cost Unit Selling Price
July 1 Beginning Inventory 50 $10
July 13 Purchase 250 13
July 25 Sold (100) $15
July 31 Ending Inventory 200

Calculate the cost of goods available for sale and ending inventory, then sales, cost of goods sold, and gross profit, under FIFO. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places and your final answers to the nearest whole dollar amount.)

Answer 1

Cost of goods available for sale is $ 3,750

Ending inventory is $2,600

Sales is $1,500

cost of goods sold is $1,150

gross profit is $ 350

Step-by-step explanation:

FIFO Method is an Inventory System that Sells First the Oldest Inventory.

A periodic inventory system calculates the Cost of Inventory with each sale made rather than after a period ( Periodic)

Cost of goods available for sale

Cost of goods available for sale = Opening Stock + Purchases

= (50× $10) + (250× $13)

= $ 3,750

Ending inventory

July 31 : 200× $13 = $2,600

Sales

July 25 : 100× $15 = $1,500

cost of goods sold

July 25 : 50× $10 = $500

50× $13 = $650

Total = $1,150

gross profit

Gross Profit = Sales - cost of goods sold

= $1,500 - $1,150

= $ 350