Question

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.

Required:
1. Calculate January's ending inventory and cost of goods sold for the month using FIFO, periodic system.

Answer 1

• Requirement 1

Ending Inventory as per FIFO = $ 77,000

Cost of Goods Sold as per FIFO = $ 63,000

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	7000	$                   6.00	$                      42,000.00	7000	$                 6.00	$               42,000.00	0	$                   6.00	$                         -
Purchases:
10-Jan	6000	$                   7.00	$                      42,000.00	3000	$                 7.00	$               21,000.00	3000	$                   7.00	$          21,000.00
18-Jan	7000	$                   8.00	$                      56,000.00	0	$                 8.00	$                              -	7000	$                   8.00	$          56,000.00
TOTAL	20000		$                    140,000.00	10000		$               63,000.00	10000		$          77,000.00