Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.
$$\begin{array} { | r | l | c | l | }
\hline \text { Date } & \text { Activities } & \text { Units Arquired at Cast } & \text { Units Sold at Retail } \
\hline \text { May 1 } & \text { Beginning Inventory } & 150 \text { units @ } \$ 10.00 & \
\hline 5 & \text { Purchase } & 220 \text { units @ } \$ 12.00 & \
\hline 10 & \text { Sales } & & 140 \text { units @ } \$ 20.00 \
\hline 15 & \text { Purchase } & 100 \text { units @ } \$ 13.00 & \
\hline 24 & \text { Sales } & & 90 \text { units @ \$21.00 } \
\hline
\end{array}$$

Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO.
$$\begin{array} { | r | l | c | l | } 
\hline \text { Date } & \text { Activities } & \text { Units Arquired at Cast } & \text { Units Sold at Retail } \
\hline \text { May 1 } & \text { Beginning Inventory } & 150 \text { units @ } \$ 10.00 & \
\hline 5 & \text { Purchase } & 220 \text { units @ } \$ 12.00 & \
\hline 10 & \text { Sales } & & 140 \text { units @ } \$ 20.00 \
\hline 15 & \text { Purchase } & 100 \text { units @ } \$ 13.00 & \
\hline 24 & \text { Sales } & & 90 \text { units @ \$21.00 } \
\hline
\end{array}$$

Quizplus · Accepted Answer

To determine the cost assigned to cost of goods sold using FIFO, we need to start with the earliest units purchased and work our way up to the most recent units.

First, we sell the 20 units from the beginning inventory at a cost of $170. This leaves us with 30 units in inventory, which are made up of the following purchases:

- 10 units purchased for $200
- 20 units purchased for $300
- 30 units purchased for $400

Next, we sell 25 units. To determine the cost of these units using FIFO, we start with the oldest units in inventory:

- 10 units from the first purchase at a cost of $200
- 15 units from the second purchase at a cost of $300

The cost of these 25 units is therefore:

(10 * $200) + (15 * $300) = $2,000 + $4,500 = $6,500

This leaves us with 5 units in inventory from the second purchase at a cost of $300 each. The cost of goods sold is therefore:

$170 + $6,500 + (5 * $300) = $2,460

Salmone Company Reported the Following Purchases and Sales of Its