In: Accounting
Ferris Company began January with 7,000 units of its principal
product. The cost of each unit is $6. Merchandise transactions for
the month of January are as follows:
Purchases | |||||||||
Date of Purchase | Units | Unit Cost* | Total Cost | ||||||
Jan. 10 | 6,000 | $ | 7 | $ | 42,000 | ||||
Jan. 18 | 7,000 | 8 | 56,000 | ||||||
Totals | 13,000 | 98,000 | |||||||
* Includes purchase price and cost of freight.
Sales | ||
Date of Sale | Units | |
Jan. 5 | 3,000 | |
Jan. 12 | 3,000 | |
Jan. 20 | 4,000 | |
Total | 10,000 | |
10,000 units were on hand at the end of the month.
Calculate January's ending inventory and cost of goods sold for the month using FIFO, perpetual system.
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*In FIFO method, the units that have purchased first, are released the first one and the ending inventory units remain from the last purchases.
*Working notes: