Perpetual Inventory Using FIFO The following units of a particular item were available for sale during the calendar year: Jan. 1 Inventory 4,000 units at $39 Apr. 19 Sale 2,400 units June 30 Purchase 4,700 units at $43 Sept. 2 Sale 4,900 units Nov. 15 Purchase 1,900 units at $46 The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

Question

Perpetual Inventory Using FIFO The following units of a particular item were available for sale during the calendar year: Jan. 1 Inventory 4,000 units at $39 Apr. 19 Sale 2,400 units June 30 Purchase 4,700 units at $43 Sept. 2 Sale 4,900 units Nov. 15 Purchase 1,900 units at $46 The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column.

Answer 1

Using the FIFO method, we assume that the units that were purchased first are the ones that are sold first.

Here is the calculation for the cost of goods sold and inventory balance after each sale:

1) April 19 Sale of 2,400 units:
- Cost of Goods Sold:
4,000 units from Jan. 1 inventory at $39 = 2,400 units * $39 = $93,600
- Inventory Balance:
Remaining units in Jan. 1 inventory = 4,000 - 2,400 = 1,600 units
Remaining inventory value = 1,600 units * $39 = $62,400

2) September 2 Sale of 4,900 units:
- Cost of Goods Sold:
Remaining units in Jan. 1 inventory (1,600 units) at $39 = 1,600 units * $39 = $62,400
3,300 units from June 30 purchase at $43 = 3,300 units * $43 = $141,900
- Inventory Balance:
Remaining units in June 30 purchase = 4,700 - 3,300 = 1,400 units
Remaining inventory value = 1,400 units * $43 = $60,200

3) Final Calculation on November 15:
- Cost of Goods Sold:
Remaining units in Jan. 1 inventory (1,600 units) at $39 = 1,600 units * $39 = $62,400
Remaining units in June 30 purchase (1,400 units) at $43 = 1,400 units * $43 = $60,200
1,900 units from Nov. 15 purchase at $46 = 1,900 units * $46 = $87,400
- Inventory Balance:
No units left in inventory

Here is the data in the requested format:

Date | Units Sold | Unit Cost | Cost of Goods Sold | Units Remaining | Inventory Unit Cost | Total Inventory Value
---------------------------------------------------------------------------------------------------------------------------
Apr. 19 | 2,400 | $39 | $93,600 | 1,600 | $39 | $62,400
Sept. 2 | 4,900 | $39 | $62,400 | 1,400 | $43 | $60,200
Nov. 15 | 1,900 | $39 | $62,400 | 0 | $43 | $60,200