Question

Brief Exercise 8-5

Blossom Company uses a periodic inventory system. For April, when the company sold 400 units, the following information is available.

		Units		Unit Cost		Total Cost
April 1 inventory		220		$11			$ 2,420
April 15 purchase		450		13			5,850
April 23 purchase		330		14			4,620
		1,000					$12,890

Compute the April 30 inventory and the April cost of goods sold using the FIFO method.

Ending inventory		$
Cost of goods sold		$

Answer 1

As per below FIFO method inventory to issued for sales or production from oldest goods or purchased have been sold or issued. So in this method we find ending inventory value will be nearby marketvalue.

• Number of units sold

Total units available ( 220+450+330)	1000 units
Less : No. of units sold	400 units
Ending inventory	600 units

• Cost of Goods sold and Ending Inventory.

	FIFO
Ending Inventory	$ 8,130
Cost of Goods Sold	$ 4,760

FIFO ( Periodic method )
Transaction	Units	Cost per unit	Total
Inventory April,1	220	$ 11	$ 2,420
Purchase April, 15	450	$ 13	$ 5,850
Purchase April, 23	330	$ 14	$ 4,620
Goods available for Sales	1,000		$ 12,890
Cost of Goods Sold
From Beginning Inventory	220	$ 11	$ 2,420
From Purchase	180	$13	$ 2,340
Total cost of Goods Sold	400		$ 4,760
Ending Inventory :
From April, 15 Purchase (450-180)	270	$ 13	$ 3,510
From April, 23 Purchase	330	$ 14	$ 4,620
Total Ending Inventory	600		$ 8,130