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Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales for Item Zeta9 are as follows:

| Date | Description | Units | Unit Cost |
|------------|---------------|-------|-------------|
| Oct. 1 | Inventory | 79 | \[tex]$23 |
| Oct. 7 | Sale | 53 | |
| Oct. 15 | Purchase | 51 | \$[/tex]27 |
| Oct. 24 | Sale | 30 | |

Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine:

a. The cost of goods sold on October 24: [tex]$\square$[/tex]

b. The inventory on October 31: [tex]$\square$[/tex]



Answer :

GinnyAnswer
Sure, let's break down the problem step-by-step to determine (a) the cost of goods sold on October 24 and (b) the inventory on October 31 using the FIFO method.

### Step-by-step Solution:

1. Initial Inventory:
- Date: October 1
- Units: 79 units
- Cost per Unit: [tex]$23 - Total Cost: 79 units × $[/tex]23/unit = [tex]$1,817 2. First Sale: - Date: October 7 - Units Sold: 53 units - Cost per Unit (FIFO): $[/tex]23
- Cost of Goods Sold (COGS) for this Sale: 53 units × [tex]$23/unit = $[/tex]1,219
- Remaining Inventory after Sale:
- Units Left: 79 units - 53 units = 26 units
- Value of Remaining Inventory: 26 units × [tex]$23/unit = $[/tex]598

3. Purchase:
- Date: October 15
- Units Purchased: 51 units
- Cost per Unit: [tex]$27 - Total Purchase Cost: 51 units × $[/tex]27/unit = [tex]$1,377 - Updated Inventory: - Total Units after Purchase: 26 units (from initial inventory) + 51 units (new purchase) = 77 units - Total Value after Purchase: $[/tex]598 (existing inventory) + [tex]$1,377 (new purchase) = $[/tex]1,975

4. Second Sale:
- Date: October 24
- Units Sold: 30 units
- Cost of Goods Sold (COGS) for this Sale:
- First 26 units come from the old inventory (FIFO) at [tex]$23/unit - Next 4 units come from the new inventory at $[/tex]27/unit
- Total Cost for the 26 units: 26 units × [tex]$23/unit = $[/tex]598
- Total Cost for the 4 units: 4 units × [tex]$27/unit = $[/tex]108
- Total COGS for this Sale: [tex]$598 + $[/tex]108 = [tex]$706 5. Remaining Inventory: - After the sale on October 24: - Old Inventory Depleted: 0 units left at $[/tex]23/unit
- New Inventory Remaining: 51 units - 4 units = 47 units at [tex]$27/unit - Total Units Left in Inventory: 0 units (old) + 47 units (new) = 47 units - Total Value of Remaining Inventory: 47 units × $[/tex]27/unit = [tex]$1,269 ### Final Answers: (a) Cost of Goods Sold on October 24: The cost of goods sold on October 24 is $[/tex]1,925 including both the sale on the 7th and the 24th as it accumulates across sales.

(b) Inventory on October 31:
The remaining inventory balance on October 31 is $1,269.

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