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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Chapter 6, Problem 16MCQ, ( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory

( Appendix 6B) Refer to the information for Morgan Inc. above. If Morgan uses a periodic inventory system, what is the cost of goods sold under FIFO at April 30?

a. $32,800

b. $38,400

c. $63,600

d. $69,200

To determine

Concept introduction:

Periodic Inventory System:

The periodic inventory system records and updates the inventory at the end of a particular period. The inventory balance is not updated after each transaction and it is updated periodically.

FIFO method:

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

To calculate:

The Cost of Goods sold under FIFO Periodic inventory system.

Explanation

The Cost of Goods sold under FIFO Periodic inventory system is calculated as follows;

Morgan Inc.
Periodic Inventory Record-FIFO
Unit Rate Total Cost
Beginning Inventory 1200 $ 25 $ 30,000
Purchase -1, Apr. 9 1500 $ 28 $ 42,000
Purchase -2, Apr...

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