PE 7-2A Perpetual inventory using FIFO

Beginning inventory, purchases, and sales for Item Charlie are as follows:


May 1 Inventory 45 units at $120
9 Sale 30 units
13 Purchase 60 units at $130
28 Sale 18 units




Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on May 28 and (b) the inventory on May 31.


Answer:

a. Cost of merchandise sold (May 28):
15 units @ $120 $1,800
3 units @ $130 390
18 $2,190
b. Inventory, May 31: $7,410 = 57 units × $130