Peach Pink Inc.has the following inventory data: $$\begin{array} { r l r r }
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & 440\&&&\$4,180
\end{array}$$ A physical count of merchandise inventory on July 31 reveals that there are 50 units on hand.Using the FIFO inventory method the amount allocated to cost of goods sold for July is
A)$3110.
B)$3170.
C)$3010.
D)$3080.

Question

Peach Pink Inc.has the following inventory data: $$\begin{array} { r l r r } 
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & 440\&&&\$4,180
\end{array}$$ A physical count of merchandise inventory on July 31 reveals that there are 50 units on hand.Using the FIFO inventory method the amount allocated to cost of goods sold for July is
A)$3110.
B)$3170.
C)$3010.
D)$3080.

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first units purchased are the first units sold. Therefore, the cost of goods sold for July is calculated as follows:Beginning inventory (40 units at $20) = $800Purchases on July 7 (140 units at $21) = $2,940Total goods available for sale = $3,740Cost of goods sold (50 units) = $3,110Therefore, the amount allocated to cost of goods sold for July using the FIFO inventory method is $3,110.

Peach Pink Inc A Physical Count of Merchandise Inventory on July 31 Reveals