Units cost inventory jan 1 8000 11 purchase june 21 13000 12...

Units Cost Inventory, Jan 1 8000 $11 Purchase June 21 13000 $12 Purchase Dec 21 5000 $13 If 17000 units are sold during the year, what is the cost of goods sold using FIFO inventory system.

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Transcript

00:01 See, first here to calculate the cost of goods sold using the first in first out inventory system we need to assume that the units sold are taken from the oldest available inventory first.

00:18 Let's calculate the cogs that is cost of goods sold step by step.

00:24 Calculate the units available for sale inventory on january 1st 8000 units then purchase on june 1 13000 units purchase on december 21 5000 units.

01:13 So, total units available for sale is equals to 8000 plus 13000 plus 5000.

01:35 So, it is equals to 26000 units.

01:43 Determine the cost of goods sold.

01:46 Since we assume that oldest inventory is sold first we starts with the units from january 1st purchase 8000 units are sold.

01:56 So, the cost of these units will be calculated at the price from january 1st purchase.

02:02 So, here 8000 units multiplied by dollar 11 per unit.

02:11 So, it is equals to dollar 88000.

02:16 Now we move to the units purchased on june 21 sorry june 21 here to this look on.

02:26 So, we have 13000 units available from this purchase, but we only need to consider the remaining units after accounting for the units sold from the january 1st purchase.

02:41 So, here 13000 units minus 8000 units which are already sold.

02:48 So, it is equals to 5000 units.

02:53 So, we have 5000 units from the june 21 purchase...

Question

Units Cost Inventory, Jan 1 8000 $11 Purchase June 21 13000 $12 Purchase Dec 21 5000 $13 If 17000 units are sold during the year, what is the cost of goods sold using FIFO inventory system.

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