A company just starting business made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 100 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is

Question

A company just starting business made the following four inventory purchases in June:  A physical count of merchandise inventory on June 30 reveals that there are 100 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is

Quizplus · Accepted Answer

Under the FIFO inventory method, the first units purchased are assumed to be the first ones sold. Therefore, the cost of goods sold for June will be calculated as follows:
Cost of goods sold = (50 units from June 10 purchase x ¥400 per unit) + (30 units from June 15 purchase x ¥450 per unit) + (20 units from June 20 purchase x ¥500 per unit) = ¥20,000 + ¥13,500 + ¥10,000 = ¥23,500
Since there were only 100 units on hand at the end of June and we allocated 100 units using FIFO, there are no units remaining from the June 25 purchase to include in cost of goods sold. Therefore, the answer is ¥23,500.

A Company Just Starting Business Made the Following Four Inventory