A company had the following purchases and sales during its first year of operations:
$$\begin{array} { | l | l | l | }
\hline & \text { Purchases } & \text { Sales } \
\hline \text { January: } & 10 \text { units at } \$ 120 & 6 \text { units } \
\hline \text { February: } & 20 \text { units at } \$ 125 & 5 \text { units } \
\hline \text { May: } & 15 \text { units at } \$ 130 & 9 \text { units } \
\hline \text { September: } & 12 \text { units at } \$ 135 & 8 \text { units } \
\hline \text { November: } & 10 \text { units at } \$ 140 & 13 \text { units } \
\hline
\end{array}$$
On December 31,there were 26 units remaining in ending inventory.
-Using the Periodic FIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A) $8,670.
B) $3,540.
C) $5,400.
D) $5,130.
E) $3,270.

Question

A company had the following purchases and sales during its first year of operations:
$$\begin{array} { | l | l | l | } 
\hline & \text { Purchases } & \text { Sales } \
\hline \text { January: } & 10 \text { units at } \$ 120 & 6 \text { units } \
\hline \text { February: } & 20 \text { units at } \$ 125 & 5 \text { units } \
\hline \text { May: } & 15 \text { units at } \$ 130 & 9 \text { units } \
\hline \text { September: } & 12 \text { units at } \$ 135 & 8 \text { units } \
\hline \text { November: } & 10 \text { units at } \$ 140 & 13 \text { units } \
\hline
\end{array}$$
On December 31,there were 26 units remaining in ending inventory.
-Using the Periodic FIFO inventory valuation method,what is the value of cost of goods sold? (Assume all sales were made on the last day of the month.)
A) $8,670.
B) $3,540.
C) $5,400.
D) $5,130.
E) $3,270.

Quizplus · Accepted Answer

Under the Periodic FIFO (First-In, First-Out) method, the cost of goods sold is calculated based on the oldest inventory costs first. The company sold a total of 41 units (6 + 5 + 9 + 8 + 13) during the year. To calculate the cost of goods sold (COGS), we start with the oldest purchases:1. January: 10 units at $120 = $1,2002. February: 20 units at $125 = $2,5003. May: 9 units at $130 (since 10 + 20 = 30 units already accounted for, and we need 11 more to reach 41, but only 9 are available from May) = $1,1704. September and November purchases are not included in COGS because the sales only required the inventory from January, February, and May.Adding these amounts gives us the COGS: $1,200 (January) + $2,500 (February) + $1,170 (May) = $4,870. However, given the options provided, it seems there might have been a mistake in the calculation or in the interpretation of the options. The correct approach following FIFO for 41 units sold would indeed involve calculating based on the oldest stock first, but none of the provided options exactly match the calculated total using the provided data and standard FIFO calculations. Given the options, the closest or intended correct answer might be a misunderstanding or misprint in the question or answer choices. Based on the standard FIFO method and the provided data, the expected calculation doesn't match the given options directly.

A Company Had the Following Purchases and Sales During Its