# Question 3Wario Widgets uses a perpetual inventory system and it uses the FIFO (First-In, First-Out) costing method. It entered into the following purchases and sales transactions for March.DateActivitiesUnits Acquired at CostUnits Sold at Retail PriceMar 1Opening inventory400 units at RM100/unit Mar 5Purchases300 units at RM150/unit Mar 10Sales 600 units at RM500/unitMar 15Purchases400 units at RM180/unit Mar 20Sales 400 units at RM500/unitMar 25Purchases200 units at RM180/unit 100 units at RM170/unit Required:Apply the FIFO costing method to compute the gross profit, the cost of goods purchased, cost of goods sold, and inventory balance for each transaction.

Question
Asked Oct 16, 2019
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Question 3

Wario Widgets uses a perpetual inventory system and it uses the FIFO (First-In, First-Out) costing method. It entered into the following purchases and sales transactions for March.

 Date Activities Units Acquired at Cost Units Sold at Retail Price Mar 1 Opening inventory 400 units at RM100/unit Mar 5 Purchases 300 units at RM150/unit Mar 10 Sales 600 units at RM500/unit Mar 15 Purchases 400 units at RM180/unit Mar 20 Sales 400 units at RM500/unit Mar 25 Purchases 200 units at RM180/unit 100 units at RM170/unit

Required:

Apply the FIFO costing method to compute the gross profit, the cost of goods purchased, cost of goods sold, and inventory balance for each transaction.

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## Expert Answer

Step 1

FIFO: In First-in-First-Out method, items purchased initially are sold first. So, the value of the ending inventory consist the recent cost for the remaining unsold items.

Perpetual inventory system: The method or system of maintaining, recording, and adjusting the inventory perpetually throughout the year, is referred to as perpetual inventory system.

Step 2

Prepare a perpetual inventory system using FIFO method.

Step 3

Therefore from above calculation cost of goods sold is \$139,000 and cost...

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