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Applying and Analyzing Inventory Costing MethodsAt the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $32. A summary of purchases during the current period follows. UnitsUnit CostCostBeginning Inventory1,000$32$32,000Purchase #11,8003461,200Purchase #28003830,400Purchase #31,2004149,200(a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period.Ending inventory balance  $ Cost of goods sold              $

Question

Applying and Analyzing Inventory Costing Methods
At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $32. A summary of purchases during the current period follows.

  Units Unit Cost Cost
Beginning Inventory 1,000 $32 $32,000
Purchase #1 1,800 34 61,200
Purchase #2 800 38 30,400
Purchase #3 1,200 41 49,200

(a) Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance. Use the financial statement effects template to record cost of goods sold for the period.
Ending inventory balance  $

 


Cost of goods sold              $

check_circleAnswer
Step 1

Assuming a sales of 3300 units in the period ans using the FIFO method (first in-first out), we arrive at the attached table for working our closing inventory.

We have to reduce the sales unit step by step from the units available in purchases and arrive at the ending inventory figure. The purchase cost per unit will then be used to calculate the ending inventory balance as done in the table.

Ending inventory ( sales of 3300 units assumed) is $ 60,600

Inventory Table
Units Purchased Unit cost $ Cost $
Units sold (assumed) Cost of goods sold in $ Ending inventory units Value of ending inventory in $
Particulars
Beginning Inventory
1000
1000
32
32000
32000
1800
Purchase # 1
1800
34
61200
61200
19000
Purchase #2
800
28
30400
500
300
11400
1200
4800
49200
172800
Purchase #3
41
1200
49200
1500
3300
112200
Total
60600
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Inventory Table Units Purchased Unit cost $ Cost $ Units sold (assumed) Cost of goods sold in $ Ending inventory units Value of ending inventory in $ Particulars Beginning Inventory 1000 1000 32 32000 32000 1800 Purchase # 1 1800 34 61200 61200 19000 Purchase #2 800 28 30400 500 300 11400 1200 4800 49200 172800 Purchase #3 41 1200 49200 1500 3300 112200 Total 60600

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Step 2

Cost of Goods sold = Beginning Inventory+ purchases of the period- Ending inventory.

Usimg the numbers arrived in table in step 1 in...

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