Question

| 7 of 30 (3 complete) This The periodic inventory records of Cambridge Prosthetics indicate the following for the month of October (Click the icon to view the inventory records.) At October 31, Cambridge counts five units of inventory on hand, Compute ending merchandise inventory and cost of goods sold for Cambridge using the FIFO inventory costing method. FIFO Cost Ending Merchandise Inventory Cost of Goods Sold A Data Table Oct 1 Beginning merchandise inventory 8 Purchase 15 Purchase 26 Purchase units @ $ 45 each 10 units @ $ 54 each 13 units @ $55 each 15 units @ $61 each Print Done Enter any number in the edit fields and then continue to the next question the first-in, first-out

Answer 1

In periodic inventory system, inventory records are not updated after each sale or purchase transaction, rather at year end all the inventory records are updated.When First in first out (FIFO) method is used, then the inventories that are sold are the inventories from the most earliest or first purchases. So, under FIFO, units in ending inventory comprises most recent units.

Calculation of ending merchandise inventory:

Units on hand as ending inventory = 5 units

Most recent cost; 26 October:

5 units @ $61 each = $305

So cost of ending merchandise inventory = $305

Calculation of cost of goods sold:

Cost of goods sold = Cost of units in beginning inventory + Cost of units purchased - Cost of units in ending inventory

Description	Amount	Amount
Cost of units in beginning inventory:
8 units @ $45 each		360
Cost of units purchased:
10 units @ $54 each	540
13 units @ $55 each	715
15 units @ $61 each	915	2170
Total cost of units available for sale		2530
Less: Cost of ending inventory		(305)
Total cost of goods sold		2225