Question

Wildhorse Co. has the following inventory data: July 1 Beginning inventory 32 units at $21 $672 7 Purchases 113 units at $22 2486 22 Purchases 16 units at $24 384 $3542 A physical count of merchandise inventory on July 30 reveals that there are 52 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is

a. $2366

b. $1112

c. $2430

d. $1176

Answer 1

• Correct Answer = Option ‘a’ $ 2,366
• Workings

>Units available = 32 + 113 + 16 = 161 units
>Units in ending inventory = 52 units
>Units sold = 161 – 52 = 109 units

>Cost of Goods Sold calculation:

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	32	$                21.00	$                            672.00	32	$         21.00	$              672.00	0	$        21.00	$                         -
Purchases:
07-Jul	113	$                22.00	$                        2,486.00	77 [109 – 32]	$         22.00	$           1,694.00	36	$        22.00	$                792.00
22-Jul	16	$                24.00	$                            384.00	0	$         24.00	$                        -	16	$        24.00	$                384.00
TOTAL	161		$                        3,542.00	109		$           2,366.00 = ANSWER	52		$            1,176.00