Question

Easton Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2019: Date Activity Quantity Unit Price 5/1 Beginning Inventory 100 $10 5/5 Purchase 250 $12 5/15 Purchase 200 $14 5/25 Purchase 250 $16 Sales were 580 units at $20. Using the LIFO method, determine the dollar value of Cost of Goods Sold for the month of May.

Answer 1

.$7,280

Step-by-step explanation:

Date Activity Quantity Unit Price

5/1 Beginning Inventory 100 $10

5/5 Purchase 250 $12

5/15 Purchase 200 $14

5/25 Purchase 250 $16

Sales were 580 units at $20.

Using the FIFO method, cot of goods sold is:

= (100 x $10) + (250 x $12) + (200 x $14) + (30 x $16) = $7,280

when you use the first in, first out (FIFO) method, you calculate cost of good sold using the oldest units in inventory first (not necessarily the oldest physical units but their price).