Question

Grays Company has inventory of 27 units at a cost of $8 each on August 1. On August 3, it purchased 37 units at $9 each. 29 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported in cost of goods sold for the 29 units that were sold?A.) $783.B.) $240.C.) $234.D.) $238.E.) $117.

Answer 1

C.) $234.

Step-by-step explanation:

The FIFO inventory system means first in first out. It means that It is assumed that the first purchased inventory is the first to be sold.

The 29 units sold would be taken from the beginning inventory and the remaining 2 units would be taken from the inventory purchased on August 3.

Cost of goods sold = (27 × $8) + (2 × $9) = $234

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