A company purchased 110 units for $20 each on 31 January.It purchased 200 units for $25 each on 28 February.It sold 200 units for $50 each from 1 March to 31 December.If the company uses the first-in,first-out inventory costing method,what is the amount of cost of sales on the income statement for the year ending 31 December? (Assume that the company uses a perpetual inventory system. )

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Quizplus · Accepted Answer

The company purchased 110 units for $20 each on 31 January, so the total cost of these units is $110 x $20 = $2,200. The company purchased 200 units for $25 each on 28 February, so the total cost of these units is $200 x $25 = $5,000. The company sold 200 units for $50 each from 1 March to 31 December, so the total revenue from these sales is $200 x $50 = $10,000. The cost of sales for the year ending 31 December is $2,200 + $5,000 = $7,200.

A Company Purchased 110 Units for $20 Each on 31