Question 2-1

If Entity B uses the First-in, First-out (FIFO) method for the inventory measurement:

        (1) What is the amount of cost of goods sold for January 20x1?

        (2) What is the amount of ending inventory at January 31, 20x1?

Date

Units

Purchased

Units Sold

Inventory

Cost

per Unit

Amount

1

Beginning inventory

1,000

$50

$50,000

11

Purchased

1,200

$52

$62,400

16

Sold

1,700

1,000

$50

$50,000

700

$52

$36,400

27

Purchased

1,400

$56

$78,400

Total

3,600

1,700

Cost of goods sold

$86,400

Ending inventory

500

$52

$26,000

Ending inventory

1,400

$56

$78,400

Total Ending inventory

$104,400

        (1) Cost of goods sold = $50,000 + $36,400 = $86,400

        (2) Ending inventory at January 31, 20x1 = 500 units x $52 + 1,400 units x $56

                = $26,000 + $78,400 = $104,400