A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.
-Using the perpetual FIFO inventory costing method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A)$8,670.
B)$3,540.
C)$5,400.
D)$5,130.
E)$3,270.

Question

A company had the following purchases and sales during its first year of operations:  On December 31,there were 26 units remaining in ending inventory.
-Using the perpetual FIFO inventory costing method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A)$8,670. 
B)$3,540. 
C)$5,400. 
D)$5,130. 
E)$3,270.

Quizplus · Accepted Answer

Using the perpetual FIFO method, we calculate the cost of goods sold by assuming that the first units purchased are the first units sold. Therefore, the cost of the 26 units in ending inventory is based on the cost of the most recent purchases, which is $220 ($110 + $110) per unit. 
The calculation is as follows: 
Cost of goods sold = (20 x $100) + (25 x $110) + (40 x $120) - (26 x $220)
Cost of goods sold = $2000 + $2750 + $4800 - $5720
Cost of goods sold = $14030 - $5720
Cost of goods sold = $8300
Therefore, the value of the cost of goods sold is $5,130 (option D).

A Company Had the Following Purchases and Sales During Its