Question

Beginning inventory, purchases, and sales for Item HM46 are as follows: August 1 Inventory 59 units @ $25 9 Sale 47 units 13 Purchase 42 units @ $28 28 Sale 19 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on August 28 and (b) the inventory on August 31. a. Cost of merchandise sold on August 28 b. Inventory on August 31

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Answer 1

Answers

• FIFO Method
  [a] Cost of merchandise sold on Aug = (12 units x $ 25) + (7 units x $ 28) = 300 + 196 = $ 496
  [b] Inventory on Aug 31 = 35 units x $ 28 = $ 980
• LIFO Method

[a] Cost of merchandise sold on Oct 21 = 93 units x $ 23 = $ 2139
[b] Inventory on Oct 31 = (20 units x $ 19) + (18 units x $ 23) = 380 + 414 = $ 794