Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company's cost of goods sold, ending merchandise inventory, and gross profit. Begin by computing the cost of goods sold and cost of ending merchandise inventory using the FIFO inventory costing method. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period.

The First-In, First-Out inventory costing method assumes that the inventory items ordered first are the first sold. This is ideal for goods that are highly perishable, for example fresh milk. Since no figures or dates are given, we will assume that the month is March 2019 and use any figures to make the example.

Date Item Quantity of stock Cost Price

01 Opening stock bought on Feb 28 10 100

05 Sale of 5 goods (cost is $10 each) (5) 50

15 Purchase of stock (20 goods at $20 each) 20 400

25 Sale of 15 goods (15) 250

(5 at $10 each & 10 at $20 each)

31 Closing Stock 10 200

(20 goods bought on 15th - 10 goods sold on 25th)

The quantity on hand at the end of the month is 10 units.

Total cost of goods on hand at end of the month = 10 units * $20 = 200.

Total cost of goods purchased during the month = $20 * 20 units = $400

Total cost of goods sold during the month = [($10 *5) + ($10 * 5)+ ($20 * 10)] = $200