Grays Company has an inventory of 19 units at a cost of $7 each on August 1. On August 3, it...
Question:
Grays Company has an inventory of 19 units at a cost of $7 each on August 1. On August 3, it purchased 29 units at $9 each, and 21 units are sold on August 6.
Using the FIFO perpetual inventory method, what amount will be reported as the cost of goods sold for the 21 units that were sold?
a. $399
b. $151
c. $155
d. $157
e. $128
Perpetual Inventory System:
The cost of goods sold expense is calculated differently under the periodic and perpetual inventory systems because, in the perpetual system, it is calculated for each sales transaction, based on the units available for sale on that date.
Answer and Explanation: 1
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The correct option is b. $151.
The underlying assumption for the first-in-first-out (FIFO) inventory method is that sales come from the oldest...
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Perpetual Inventory System: Definition, Advantages & Examples
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Learn about the perpetual inventory system and how it is used. Explore the advantages of perpetual inventory systems and compare perpetual vs. periodic inventory.
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