Baldwin, Inc. had the following balances and transactions during 2019: $$\begin{array} { | l | l | }
\hline \text { Beginning Merchandise Inventory as of January 1,2019 } & 125 \text { units at } \$ 81 \
\hline \text { March } 10 & \text { Sold } 50 \text { units } \
\hline \text { June } 10 & \text { Purchased } 225 \text { units at } \$ 86 \
\hline \text { October } 30 & \text { Sold } 175 \text { units } \
\hline
\end{array}$$ What would be reported as Cost of Goods Sold on the income statement for the year ending December 31, 2019 if the perpetual inventory system and the first-in, first-out inventory costing method are used?

Question

Baldwin, Inc. had the following balances and transactions during 2019: $$\begin{array} { | l | l | } 
\hline \text { Beginning Merchandise Inventory as of January 1,2019 } & 125 \text { units at } \$ 81 \
\hline \text { March } 10 & \text { Sold } 50 \text { units } \
\hline \text { June } 10 & \text { Purchased } 225 \text { units at } \$ 86 \
\hline \text { October } 30 & \text { Sold } 175 \text { units } \
\hline
\end{array}$$ What would be reported as Cost of Goods Sold on the income statement for the year ending December 31, 2019 if the perpetual inventory system and the first-in, first-out inventory costing method are used?

Quizplus · Accepted Answer

Under the FIFO method, the earliest costs are assigned to the cost of goods sold. The calculation is as follows: - First sale of 50 units from beginning inventory: 50 units * $81 = $4,050 - Second sale of 175 units involves the remaining 75 units from beginning inventory and 100 units from the June purchase: 75 units * $81 + 100 units * $86 = $6,075 + $8,600 = $14,675. Adding both sales: $4,050 + $14,675 = $18,725.

Baldwin, Inc What Would Be Reported as Cost of Goods Sold on \begin{array}