To solve for the cost of goods sold on October 24 and the inventory on October 31 using the FIFO (First In, First Out) method, we will go through the transactions step by step.
Initial Inventory and Purchases:
- Oct. 1: Beginning Inventory: 55 units @ $15 = $825
- Oct. 15: Purchase: 46 units @ $18 = $828
Total Inventory Before Any Sales:
- 55 units @ $15
- 46 units @ $18
Total number of units before any sales:
- 55 + 46 = 101 units
Sales Transactions:
-
Oct. 7: Sale of 36 units
- According to FIFO, we sell the oldest inventory first:
- Sell 36 units from the beginning inventory:
- 36 units @ $15 = $540
- Remaining Inventory after this sale:
- 19 units @ $15
- 46 units @ $18
-
Oct. 24: Sale of 24 units
- Again, using FIFO, we sell the oldest inventory first:
- From the remaining units, we sell 19 units from the beginning inventory:
- 19 units @ $15 = $285
- Remaining units after selling 19:
- 0 units @ $15
- 46 units @ $18
- Now we need to sell 5 more units (24 - 19 = 5) from the new purchase:
- 5 units @ $18 = $90
Cost of Goods Sold on October 24 (Total for this sale):
- COGS = 19 units @ $15 + 5 units @ $18
- COGS = $285 + $90 = $375
Now, let's summarize this: a. Cost of goods sold on October 24: $375
Now let’s calculate the remaining inventory on October 31:
After the sales on October 7 and October 24:
- After Oct. 24 sale:
- Remaining Inventory:
- 0 units @ $15
- 46 units - 5 units sold = 41 units @ $18
- Remaining Inventory:
Inventory on October 31:
- 41 units @ $18 = $738
Summarizing: b. Inventory on October 31: $738
Final Answers: a. Cost of goods sold on October 24: $375 b. Inventory on October 31: $738
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