Cengage .. CengageNOW/21 Onl Q Accounting Ch. 7 Flas × | Q Accounting ch. 7 Flas

Question

Cengage .. CengageNOW/21 Onl Q Accounting Ch. 7 Flas × | Q Accounting ch. 7 Flas × © Cengage-Cen × 3·Determining gross p × + * ¢v2.cengagenow.com/ilrntakeAssignment/takeAssignmentMain.do?!nvoker-... asearch CHAPTER 7 - INVENTORIES Study Progress Previous Page 6 of 18 exo Submit Quiz Determine the cost of merchandise sold for the transaction on September 25 using the perpetual inventory system and the FIFO method. Date Item Beginning inventory Purchase Sale Unlts Cost Total 5S5 $25 48 September 4 September 8 15 7 105 September 25 Sale O a. $77 O b. $73 O c. $105 O d. $84 12 Save and Exit Submit Assignment for Grading e Learning 12:10 PM E 11/15/2017 11 Type here to search 97

Explanation / Answer

IN FIFO method the goods purchased first will be sold first,

In the question when the first sale is made on Sep 8 , the goods from the beginning inventory will be sold first

So after the sale remaining goods = 7 units @ $6/unit

When second sale is made on 25th Sep then remaining 7 units will be sold first, remaining (12 – 7 = 5) units will be taken from the Sep 20th purchase

So COGS = (7*6 + 5*7)

                 = 42 + 35

                  = 77

Correct answer is A.

  

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