Moss Co. uses the FIFO method to calculate ending inventory. Assuming 300 units are not sold, the cost of goods sold is: $$\begin{array} { | l | l | l | }
\hline \text { January 1 Inventory } & 200 \text { units at } \$ 9 & \$ 1,800 \
\hline \text { Feb 15 Purchase } & 300 \text { units at } \$ 10 & \$ 3,000 \
\hline \text { Aug 20 Purchase } & 400 \text { units at } \$ 11 & \$ 4,400 \
\hline \text { Dec 20 Purchase } & 100 \text { units at } \$ 12 & \$ 1,200 \
\hline
\end{array}$$
A)$7,600
B)$7,280
C)$3,120
D)$3,400
E)None of these

Question

Moss Co. uses the FIFO method to calculate ending inventory. Assuming 300 units are not sold, the cost of goods sold is: $$\begin{array} { | l | l | l | } 
\hline \text { January 1 Inventory } & 200 \text { units at } \$ 9 & \$ 1,800 \
\hline \text { Feb 15 Purchase } & 300 \text { units at } \$ 10 & \$ 3,000 \
\hline \text { Aug 20 Purchase } & 400 \text { units at } \$ 11 & \$ 4,400 \
\hline \text { Dec 20 Purchase } & 100 \text { units at } \$ 12 & \$ 1,200 \
\hline
\end{array}$$
A)$7,600
B)$7,280
C)$3,120
D)$3,400
E)None of these

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) method, the earliest goods purchased are the first to be sold. To calculate the cost of goods sold (COGS), we start with the earliest purchases and work our way to the latest until we've accounted for all units sold. Given that 300 units are not sold, we first need to calculate the total units purchased and then subtract the unsold units to find the units sold.Total units purchased = 200 (Jan) + 300 (Feb) + 400 (Aug) + 100 (Dec) = 1,000 unitsTotal units not sold = 300 unitsTherefore, units sold = 1,000 units - 300 units = 700 unitsTo calculate COGS under FIFO, we start with the oldest inventory and move forward:1. 200 units from January 1 at $9 = $1,8002. 300 units from February 15 at $10 = $3,0003. 200 units from August 20 at $11 (since we need only 700 - 500 = 200 more units to reach 700 units sold) = $2,200COGS = $1,800 (Jan) + $3,000 (Feb) + $2,200 (Aug) = $7,000Since none of the provided options matches the calculated COGS of $7,000, the correct answer is E) None of these.

Moss Co Uses the FIFO Method to Calculate Ending Inventory