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    jvb2g's Avatar
    jvb2g Posts: 2, Reputation: 1
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    #1

    Nov 4, 2009, 09:04 PM
    I need to the what ths cost of goods sold for July would be
    Date Transaction Units Cost of each item

    7/1 Beginning Inventory 100 $2
    7/10 Purchase 100 $3
    7/11 SOLD 100?
    7/12 Purchase 100 $4
    7/13 SOLD 100?

    Assume that the company uses a FIFO cost flow assumption. What is the cost of goods sold for July?
    decisionsupport's Avatar
    decisionsupport Posts: 31, Reputation: 1
    Junior Member
    		  
    #2

    Nov 4, 2009, 10:35 PM

    You're using FIFO (First In First out) - So, look at the first SOLD data you have on 7/11. You sold a 100 units and since you're using FIFO, you use the oldest inventory you have. In this case, it would be your beginning inventory at $2.

    The second sale you made was for a 100 units on the 13th. At that point your oldest inventory cost you $3 bucks a piece.

    So your cost of goods sold is 100 units @ $2 + 100 units @ $3 = $500
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