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In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking...

In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole’s Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31, NGS purchased 20 units at a total cost of $5.30 per unit. Nicole purchased 20 more units at $7.30 in February. In March, Nicole purchased 20 units at $9.30 per unit. In May, 40 units were purchased at $9.10 per unit. In June, NGS sold 40 units at a selling price of $11.30 per unit and 50 units at $11.70 per unit. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method.

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Solution:

Computation of ending inventory COGS under FIFO
Date Cost of goods available for sale Cost of Goods Sold Ending Inventory
Qty Rate Amount Qty Rate Amount Qty Rate Amount
Dec 20 $5.30 $106.00 0 $0.00 $0.00 20 $5.30 $106.00
Feb 20 $7.30 $146.00 0 $0.00 $0.00 20 $5.30 $106.00
20 $7.30 $146.00
Mar 20 $9.30 $186.00 0 $0.00 $0.00 20 $5.30 $106.00
20 $7.30 $146.00
20 $9.30 $186.00
May 40 $9.10 $364.00 0 $0.00 $0.00 20 $5.30 $106.00
20 $7.30 $146.00
20 $9.30 $186.00
40 $9.10 $364.00
June 0 $0.00 $0.00 20 $5.30 $106.00 10 $9.10 $91.00
20 $7.30 $146.00
20 $9.30 $186.00
30 $9.10 $273.00
Total 100 $802.00 90 $711.00 10 $91.00

ekkarill92 answered 1 year ago
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