Question

Holiday Company uses the periodic inventory system. For the current month, the beginning inventory consisted of 200 units that cost $195 each. During the month, the company made two purchases: 300 units at $207 each and 150 units at $210 each. The company also sold 500 units during the month.

Using the FIFO method, what is the amount of cost of goods sold for the month?

Answer 1

$31,500

Step-by-step explanation:

The computation of the ending inventory under the FIFO method using the periodic inventory is shown below:

But before that first we have to find out the ending units which is

= 200 units + 300 units + 150 units - 500 units

= 150 units

Now the ending inventory is

= 150 units × $210

= $31,500

We take the purchase price per unit from the second purchase