Q7TI-a Serenity Books has the following... [FREE SOLUTION]

91影视

Chapter 6: Q7TI-a (page 350)

Serenity Books has the following transactions in August related to merchandise inventory.
Aug. 1 Beginning merchandise inventory, 10 books @ $15 each
3 Sold 3 books @ $20 each
12 Purchased 8 books @ $18 each
15 Sold 9 books @ $20 each
20 Purchased 4 books @ $20 each
28 Sold 5 books @ $25 each
a. Determine the cost of goods sold and ending merchandise inventory using the FIFO inventory costing method assuming Serenity Books uses the periodic inventory system.

Short Answer

Expert verified

Ending Inventory: $98

Cost of goods sold: $276

Step by step solution

Ending inventory using FIFO periodic inventory

Using FIFO, the ending inventory would be valued at the current prices.

$\begin{matrix} E n d i n g I n v e n t o r y (U n i t s) = B e g i n n i n g I n v e n t o r y (u n i t s) + T o t a l P u r c h a s e s (U n i t s) - T o t a l S a l e s (u n i t s) \\ = 10 + (8 + 4) - (3 + 9 + 5) \\ = 10 + 12 - 17 \\ = 5 \end{matrix}$

$\begin{matrix} E n d i n g I n v e n t o r y (V a l u e) = P u r c h a s e c o s t f o r 20 t h A u g + P u r c h a s e c o s t f o r o n e u n i t f o r 12 t h A u g \\ = 4 脳 $ 20 + 1 脳 $ 18 \\ = $ 98 \end{matrix}$

Computation of cost of goods sold

$\begin{matrix} C o s t o f g o o d s s o l d = B e g i n n i n g I n v e n t o r y V a l u e + T o t a l P u r c h a s e V a l u e - E n d i n g I n v e n t o r y V a l u e \\ = 10 脳 $ 15 + (8 脳 $ 18 + 4 脳 $ 20) - $ 98 \\ = $ 150 + $ 224 - $ 98 \\ = $ 276 \end{matrix}$

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

91影视

Short Answer

Step by step solution

Ending inventory using FIFO periodic inventory

Computation of cost of goods sold

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Public Relations Business Studies

Strategic Direction

Managers

Project Planning & Management

Financial Performance

Corporate Finance

Study anywhere. Anytime. Across all devices.