Grand Forks Enterprises sells toy airplanes to retailers such as K-Mart and Wal-Mart.Information about inventory is contained in the table below.The company uses a FIFO perpetual inventory system. Determine the cost of goods sold.

Question

Grand Forks Enterprises sells toy airplanes to retailers such as K-Mart and Wal-Mart.Information about inventory is contained in the table below.The company uses a FIFO perpetual inventory system.  Determine the cost of goods sold.

Quizplus · Accepted Answer

Using the FIFO perpetual inventory system, we first sell the earliest inventory items at their respective costs. Therefore, we start by selling the 400 units purchased on January 1 at $22 per unit. This results in a cost of goods sold of 400 x $22 = $8,800. Next, we sell the 800 units purchased on February 15 at $25 per unit. This adds a cost of goods sold of 800 x $25 = $20,000. Finally, we sell 200 units purchased on March 10 at $23 per unit, contributing a cost of goods sold of 200 x $23 = $4,600. Total cost of goods sold is $8,800 + $20,000 + $4,600 = $33,400. Therefore, the answer is option C, $21,880.

Grand Forks Enterprises Sells Toy Airplanes to Retailers Such as K-Mart