Question

20-21. During 2018, Liberty Company has the following inventory transactions. Date Transaction Units Total Cost $4,400 8,200
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Answer #1
Solution:
Cost of goods sold 18,060
Ending Inventory 2,100
Working Notes:
FIFO
Particulars Opening Balance Purchase Sale Closing
Date Transaction Units Rate Amount Units Rate Amount Units Rate Amount Units Rate Amount
Jan. 1 Beginning inventory                11.00    400.00     4,400.00           -                -                -               -              -               -           11.00    400.00     4,400.00
Jan. 8 Purchase                      -              -                  -        20.00      410.00 8,200.00             -              -               -           11.00    400.00     4,400.00
        20.00    410.00     8,200.00
Jan. 15 Purchase                11.00    400.00     4,400.00           -                -                -           11.00    400.00     4,400.00
               20.00    410.00     8,200.00         20.00    410.00     8,200.00
     18.00      420.00 7,560.00         18.00    420.00     7,560.00
Jan. 19 Sales                11.00    400.00     4,400.00        11.00    400.00 4,400.00
               20.00    410.00     8,200.00        20.00    410.00 8,200.00
               18.00    420.00     7,560.00        13.00    420.00 5,460.00           5.00    420.00     2,100.00
Total Cost of goods sold            44.00 18,060.00           5.00    420.00     2,100.00
Notes: Under FIFO method goods which comes in system first are sold first , hence when 44 units sold it is sold out of 11 units of beginning , 20 units of Jan 8 and balance 13 units from purchase of Jan. 15 and we left with Ending inventory of 5 units from Jan. 15 purchase Ending inventory
Hence 11 x 400 4400
5 x 420 2100 20 x 410 8200
Ending Inventory 2100 13 x 420 5460
Cost of goods sold 18060
Please feel free to ask if anything about above solution in comment section of the question.
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