Delta Diamonds uses a periodic inventory system.The company had five one-carat diamonds available for sale this year: one was purchased on June 1 for $500,two were purchased on July 9 for $550 each,and two were purchased on September 23 for $600 each.On December 24,it sold one of the diamonds that was purchased on July 9.Using the FIFO method,its cost of goods sold for the year ended is:
A)$1,100.
B)$600.
C)$1,200.
D)$500.

Question

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) method, the oldest inventory items are sold first. The diamond sold on December 24, which was purchased on July 9 under FIFO, would actually be considered as sold from the oldest inventory available, which is the one purchased on June 1 for $500.

Delta Diamonds Uses a Periodic Inventory System