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In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 150 units at $5 on January 1, (2) 460 units at $6 on January 8, and (3) 760 units at $8 on January 29. Assume 915 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under FIFO. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.)

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Answer:

Instructions are listed below.

Explanation:

Giving the following information:

(1) 150 units at $5 on January 1,

(2) 460 units at $6 on January 8, and

(3) 760 units at $8 on January 29.

Assume 915 units are on hand at the end of the month.

Cost of goods available for sale= 150*5 + 460*6 + 760*8= $9,590

Ending inventory= 760*8 + 155*6= $7,010

Cost of goods sold= 150*5 + 305*6= $2,580

anthougo

The cost of goods available for sale for the Literacy for the Illiterate is $9,590.

The cost of ending inventory for the Literacy for the Illiterate is $7,010.

The cost of goods sold for the Literacy for the Illiterate is $2,580.

Data and Calculations:

Date      Description                Units   Unit Cost   Total Cost

Jan. 1    Beginning inventory   150            $5           $750

Jan. 8   Purchase                    460            $6           2,760

Jan. 29 Purchase                   760             $8          6,080

Total units/cost available    1,370                         $9,590

Jan. 31  Ending inventory      915

FIFO:

Cost of ending inventory = $7,010 (760 x $8 + 155 x $6)

Cost of goods sold = $2,580 ($9,590 - $7,010)

Thus, the cost of goods available for sale equals the cost of ending inventory plus the cost of goods sold.

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