Question

Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 2,000 of Fishe’s CDs with a unit cost of $7. During October, Express made the following purchases of Fishe’s CDs.

Oct. 3		2,500	@	$8		Oct. 19		3,000	@	$10
Oct. 9		3,500	@	$9		Oct. 25		4,000	@	$11

During October, 10,900 units were sold. Express uses a periodic inventory system.

I need help figuring out how to use the FIFO method for cost of goods sold and the ending inventory.

Answer 1

• All working forms part of the answer
• FIFO method is used with Periodic method.
• Note that under FIFO, sales are made from earliest purchases (opening inventory) first, followed by later purchases.

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	2000	7	14000	2000	7	14000	0	7	0
Purchases:
Oct-03	2500	8	20000	2500	8	20000	0	8	0
Oct-09	3500	9	31500	3500	9	31500	0	9	0
Oct-19	3000	10	30000	2900*	10	29000	100	10	1000
Oct-25	4000	11	44000		11	0	4000	11	44000
TOTAL	15000		$139500	10900		$94500	4100		$45000

Units Sold	10900
(-)Sold from purchases on:
Beginning Inventory	2000
Oct-03	2500
Oct-09	3500
*Balance from Oct 19 Purchases	2900