Given:
Wright Company sells 475 remote-control airplanes for $120 each.
Inventory purchase transactions are as follows:
Date
Quantity
Unit Cost
We can calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO as follows:
First, we need to calculate the total cost of goods available for sale.(140 × 30) + (100 × 35) + (150 × 38) = 4,200 + 3,500 + 5,700 = $13,400. Cost of goods available for sale = $13,400.
Next, we need to calculate the cost of goods sold (COGS) using the FIFO method.FIFO assumes that the items that are sold first are the items that were acquired first (first-in, first-out).So, the cost of the first 140 units sold would be $30 each, which gives a total cost of 140 × 30 = $4,200.The next 100 units sold would be the units acquired at $35 each. This gives a total cost of 100 × 35 = $3,500.The remaining 235 units would be from the purchase in September, which were acquired at $38 each. So the total cost would be 235 × 38 = $8,930.Cost of goods sold (COGS) = 4,200 + 3,500 + 8,930 = $16,630Finally, we can calculate the ending inventory by taking the cost of goods available for sale and subtracting the cost of goods sold.Ending inventory = Cost of goods available for sale − Cost of goods sold= $13,400 − $16,630= ($3,230)Since the ending inventory is negative, we can say that the company had no inventory left at the end of the year.