Question

In: Accounting

Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold....

Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information:

Date Description # of units Cost per unit
January 1 Beginning inventory 280 $ 6
June 2 Purchase 75 $ 5
November 5 Sales 305

What amounts would be reported as the cost of goods sold and ending inventory balances for the year?

Solutions

Expert Solution

Ans. Available for sale
Date Units Rate Total
1-Jan 280 $6.00 $1,680
2-Jun 75 $5.00 $375
Cost of goods available for sale 355 $2,055
Units sold   =    305 units
*In FIFO method the units that have purchased first, are released the first one and the ending inventory
units remain from the last purchases.
Periodic FIFO:
Date Units Rate Total
1-Jan 280 $6.00 $1,680
2-Jun 25 $5.00 $125
Cost of goods sold 305 $1,805
Ending inventory = Total cost of goods available for sale - Cost of goods sold
$2,055 - $1,805
$250

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