# Use the first-in, first-out (FIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 10, Problem 5PA
Textbook Problem
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## Use the first-in, first-out (FIFO) cost allocation method, with perpetual inventory updating, to calculate (a) sales revenue, (b) cost of goods sold, and c) gross margin for A75 Company, considering the following transactions.

To determine

Concept introduction:

Perpetual Inventory System: The perpetual inventory system maintains records and updates the inventory after each transaction. The inventory balance is updated after every transaction.

FIFO method: FIFO Stands for First In First Out. Under this method, the units purchased first are assumed to be issue first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the latest purchasedunits.

Requirement-1:

To calculate:

Sales revenue.

### Explanation of Solution

Sales revenue

 Number of Units Unit Cost Total
To determine

Concept introduction:

Perpetual Inventory System: The perpetual inventory system maintains records and updates the inventory after each transaction. The inventory balance is updated after every transaction.

FIFO method: FIFO Stands for First In First Out. Under this method, the units purchased first are assumed to be issue first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the latest purchasedunits.

Requirement-2:

To calculate:

Cost of goods sold.

To determine

Concept introduction:

Perpetual Inventory System: The perpetual inventory system maintains records and updates the inventory after each transaction. The inventory balance is updated after every transaction.

FIFO method: FIFO Stands for First In First Out. Under this method, the units purchased first are assumed to be issue first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the latest purchasedunits.

Requirement-3:

To calculate:

Gross margin using FIFO perpetual inventory method.

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