McCarthy Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the FIFO perpetual inventory method,what amount will be reported in cost of goods sold for the 11 units that were sold?
A)$2,239.
B)$2,255.
C)$2,200.
D)$2,228.
E)$2,215.

Question

Quizplus · Accepted Answer

Under the FIFO method, the first units purchased are the first to be sold. McCarthy Company had 8 units at $200 each and purchased 20 units at $205 each. For the 11 units sold, 8 units are from the initial inventory at $200 each, and 3 units are from the new purchase at $205 each. The cost of goods sold is (8 units x $200) + (3 units x $205) = $1,600 + $615 = $2,215.

McCarthy Company Has Inventory of 8 Units at a Cost