Question

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Ferris Company began January with 6,000 units of its principal product. The cost of each unit is $5. Merchandise transactions for the month of January are as follows:

	Purchases
Date of Purchase	Units		Unit Cost*			Total Cost
Jan. 10	5,000		$	6			$	30,000
Jan. 18	6,000			7				42,000
Totals	11,000							72,000

* Includes purchase price and cost of freight.

Sales
Date of Sale	Units
Jan. 5	3,000
Jan. 12	2,000
Jan. 20	4,000
Total	9,000

8,000 units were on hand at the end of the month.

Required:
1. Calculate January's ending inventory and cost of goods sold for the month using FIFO, periodic system.

Answer 1

Computation of ending inventory and cost of goods sold by using FIFO methods:

Ending inventory = 8000 units

Cost of ending inventory = 6000 units @$7 + 2000 units @$6

= $42000 + $12000

= $54000.

Number of units sold = 9000 units.

Cost of goods sold = 6000 units @$5 + 3000 units @$6

= $30000 + $18000

= $48000.