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Sara's Boutique has the following transactions related to its top-selling Gucci purse for the month of October. Sara's Boutique uses a periodic inventory system.

\begin{tabular}{|c|c|c|c|c|}
\hline
Date & Transactions & Units & Unit Cost & Total Cost \\
\hline
October 1 & Beginning inventory & 6 & \[tex]$700 & \$[/tex]4,200 \\
\hline
October 4 & Sale & 4 & & \\
\hline
October 10 & Purchase & 5 & \[tex]$710 & \$[/tex]3,550 \\
\hline
October 13 & Sale & 3 & & \\
\hline
October 20 & Purchase & 4 & \[tex]$720 & \$[/tex]2,880 \\
\hline
October 28 & Sale & 7 & & \\
\hline
October 30 & Purchase & 8 & \[tex]$730 & \$[/tex]5,840 \\
\hline
& & & & \$16,470 \\
\hline
\end{tabular}

2. Using FIFO, calculate ending inventory and cost of goods sold at October 31.

\begin{tabular}{|l|}
\hline
Ending inventory \\
\hline
Cost of goods sold \\
\hline
\end{tabular}



Answer :

GinnyAnswer
To calculate the ending inventory and the cost of goods sold (COGS) using the FIFO (First In, First Out) method, let's go step by step through the transactions from Sara's Boutique for the month of October.

### Step 1: Beginning Inventory
- Units: 6
- Unit Cost: [tex]$700 - Total Cost: $[/tex]4,200

### Step 2: Transaction Details

#### Purchases Added to Inventory:
- October 10: 5 units at [tex]$710 each - October 20: 4 units at $[/tex]720 each
- October 30: 8 units at [tex]$730 each #### Sales Details: - October 4: Sold 4 units - October 13: Sold 3 units - October 28: Sold 7 units ### Step 3: Calculate Cost of Goods Sold (COGS) We will follow the FIFO method to calculate the COGS. 1. October 4 Sale: 4 units - Take from the beginning inventory. - 4 units x $[/tex]700 = [tex]$2800 2. October 13 Sale: 3 units - Remaining beginning inventory = 6 - 4 = 2 units - Next, take 2 units from the beginning inventory. - 2 units x $[/tex]700 = [tex]$1400 - Then, take 1 unit from the October 10 purchase. - 1 unit x $[/tex]710 = [tex]$710 - Total for this sale: $[/tex]1400 + [tex]$710 = $[/tex]2110

3. October 28 Sale: 7 units
- Remaining units from October 10 purchase = 5 - 1 = 4 units
- Take all 4 units from October 10 purchase.
- 4 units x [tex]$710 = $[/tex]2840
- Then take 3 units from October 20 purchase.
- 3 units x [tex]$720 = $[/tex]2160
- Total for this sale: [tex]$2840 + $[/tex]2160 = [tex]$5000 Adding up the COGS: - $[/tex]2800 (October 4 Sale)
- [tex]$2110 (October 13 Sale) - $[/tex]5000 (October 28 Sale)

Total COGS = [tex]$2800 + $[/tex]2110 + [tex]$5000 = $[/tex]9910

### Step 4: Calculate Ending Inventory

The units remaining in inventory after all sales are:
- From October 20 Purchase: 1 unit (since 3 were sold out of 4 units)
- From October 30 Purchase: All 8 units

Calculating the value:
- 1 unit x [tex]$720 = $[/tex]720
- 8 units x [tex]$730 = $[/tex]5840

Total ending inventory value = [tex]$720 + $[/tex]5840 = [tex]$6560 ### Final Answer: - Ending Inventory: $[/tex]6560
- Cost of Goods Sold (COGS): $9910

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