A company just starting business made the following four inventory purchases in June: A physical count of merchandise inventory on June 30 reveals that there are 100 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is
A) ¥4,400.
B) ¥24,000.
C) ¥23,600.
D) ¥24,533.

Question

A company just starting business made the following four inventory purchases in June:  A physical count of merchandise inventory on June 30 reveals that there are 100 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is
A) ¥4,400. 
B) ¥24,000. 
C) ¥23,600. 
D) ¥24,533.

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first units purchased are the first units sold. Therefore, the cost of goods sold for June consists of the cost of the first two purchases: 
100 units * ¥230 (cost of first purchase) = ¥23,000 
40 units * ¥240 (cost of second purchase) = ¥9,600 
Total cost of goods sold = ¥23,000 + ¥9,600 = ¥23,600.

A Company Just Starting Business Made the Following Four Inventory