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23 January, 15:41

Goodman Company's inventory records show the following dа ta: Units 5,000 4,500 3,000 Unit Cost $9.00 8.20 7.00 Inventory, January 1 Purchases: June 18 November 8 A physical inventory on December 31 shows 3,000 units on hand. Under the FIFO method, the December 31 inventory is O A. $21,000. O B. $27,000. C. $24,696. O D. $24,600.

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  1. 23 January, 17:39
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    A. 3000 units x $7 = $21000

    Explanation:

    FIFO (First-In-First-Out) is a method of inventory valuation where the stock that is purchased first is used first. In other words, the oldest stock is used first. This is common for perishable items which if not used up fast, will be wasted.

    Jan 01 - Beginning inventory : 5000 units x $9 = $45000

    Jun 18 - Purchases : 4500 units x $8.20 = $36900

    Nov 08 - Purchases : 3000 units x $7 = $21000

    Total inventory = 5000 + 4500 + 3000 = 12,500 units

    Ending inventory = 3,000 units

    Hence, inventory sold = 9,500 units

    The cost of goods sold using FIFO:

    5000 units x $9 = $45000

    4500 units x $8.20 = $36900

    COGS = $45000 + $36900 = $81900 (9500 units)

    Ending inventory:

    3000 units x $7 = $21000 (3000 units)
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