Cost of Goods Sold: ThreeBrothers uses a periodic FIFO inventory system for its

Question

Cost of Goods Sold: ThreeBrothers uses a periodic FIFO inventory system for its normal operations. A physical inventory count indicated 40,000 units on hand at the end of 2017.

                                    PURCHASES FOR 2017(normal operations)

Beginning units:

5,000 units @ $500 each

Purchases:

   Apr - May   

40,000 units @ $500 each

   Jun - Jul      

35,000 units @ $505 each

   Aug - Sep  

48,500 units @ $515 each

   Oct             

24,000 units @ $520 each

   Nov - Dec

20,000 units @ $535 each

Beginning units:

5,000 units @ $500 each

Purchases:

   Apr - May   

40,000 units @ $500 each

   Jun - Jul      

35,000 units @ $505 each

   Aug - Sep  

48,500 units @ $515 each

   Oct             

24,000 units @ $520 each

   Nov - Dec

20,000 units @ $535 each

Explanation / Answer

Units Unit cost Total Beginning units 5000 500 2500000    Apr - May    40000 500 20000000    Jun - Jul       35000 505 17675000    Aug - Sep   48500 515 24977500    Oct              24000 520 12480000    Nov - Dec 20000 535 10700000 Total 172500 88332500 Ending inventory = (20000*535)+(20000*520)= $21100000 Cost of goods sold = 88332500-21100000= $67232500

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