Help please! Adjusting Entry 1: cost of goods sold. classic furnace uses the fif

Question

Help please!

Adjusting Entry 1: cost of goods sold. classic furnace uses the fifo inventory method. classic furnace had the following units:

Dec 1st Beginning inventory INPUT#1 = $8

Purchase on Dec 7th INPUT #2= $10

Purchase on Dec 14th INPUT #3 .= $10

Units sold during Dec INPUT #4 = 23

1.Furnace sales for Dec 2017 were $ 107,500 on account

2. Classic Furnace paid a cash payroll of $6,290 on Dec 15, 2017

3. Classic Furnace paid a cash payroll of $5,040 on Dec 29, 2017

4. Classic Furnace ordered furnaces for inventory. Purchases were delivered on Dec 7, 2017 for $30,000 and on Dec 14th, 2017 for $24,000. Both purchases were on account.

  

Explanation / Answer

Step 1 : Calculation of Units of Closing Inventory

As per FIFO method of valuation of Inventory, the units which are purchased first will be sold first.It means the closing inventory of 5 units should be the units purchased on 14 December.

Step 2 : Valuation of Inventory as per FIFO

Step 3 : Journal Entries for the transactions   (Amount in $)

Beginning Inventory 8 units Add: Purchased during the month (10+10) 20 units Less: Units sold during the year (23 units) Closing Inventory 5 units

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