Exercise 4 - Calculating FIFO inventory and cost of goods sold with write- downs
ID: 2547537 • Letter: E
Question
Exercise 4 - Calculating FIFO inventory and cost of goods sold with write- downs: Eitan Inc. sells iPhones and uses the periodic inventory system. The company has provided the following information about one of its items: Date 01/01/2017 07/22/2017 10/03/2017 12/31/2017 Transaction Beginning inventor Purchase Purchase Ending invento Number of units 840 750 410 700 Cost per unit $10 $14 $15 Eitan Inc. uses the FIFO cost flow assumption Required: 1. Calculate Eitan Inc.'s inventory and cost of goods 2. Assume that the replacement (market) cost of an iPhone is $12. What is Eitan's cost of goods sold and inventory in 2017?Explanation / Answer
FIFO Periodic
As per FIFO
Eitan Inc.'s Inventory = 700
Inventory = 410 * $15 + 290 * $14
= $10,210
COGS = 1300 units
COGS = 840 * $10 + 460*$14
= $ 14840
If replacement (market) cost of an iphone = $12
Cost of goods sold = 840 * $10 + 460*$12
= 13920
Ending Inventory = 410 * $12 + 290 * $12
= 8400
Units Available for Sale = 840+750 + 410 = 2000 Units in Ending Inventory = 700 = 700 Units sold =2000 - 700 = 1300Related Questions
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