**Problem Statement:**The Beach Bum Surf Co. is evaluating the inventory of its most popular boogie board as the summer season ends. The company had a beginning inventory of 20 boards at a cost of $25 each. Additional purchases were made as follows:- 130 boards at $27 each,- 140 boards at $28 each,- 135 boards at $30 each.The ending inventory is 15 boards, and Beach Bum uses the FIFO (First-In, First-Out) accounting method. What would be the dollar amount assigned to the cost of goods sold (COGS)?**Solution Explanation:**To calculate the cost of goods sold using FIFO, we need to determine the cost of the oldest inventory first.1. **Beginning Inventory:** - 20 boards at $25 = $5002. **Purchases:** - 130 boards at $27 = $3,510 - 140 boards at $28 = $3,920 - 135 boards at $30 = $4,0503. **Total Inventory before Sales:** - Total boards = 20 + 130 + 140 + 135 = 425 boards4. **COGS Calculation:** - Since 15 boards are left in inventory, 410 boards were sold (425 total boards - 15 ending boards). - Using FIFO, start subtracting from the beginning. Keep removing boards in the order of earliest purchase until you reach the total amount sold (410 boards): - 20 boards at $25 (beginning inventory) = $500 - 130 boards at $27 = $3,510 - 140 boards at $28 = $3,920 - 120 boards from 135 remaining at $30 = $3,600 5. **Calculate COGS:** - COGS = $500 + $3,510 + $3,920 + $3,600 = $11,530Thus, the dollar amount assigned to the cost of goods sold under FIFO is $11,530.

Formula: FIFO: FIFO stands for First in First out. Which means first received inventory to be sold…

9. Now assume the same information: The Beach Bum Surf Co. is evaluating the inventory of its most popular boogie board as the summer season ends. They had beginning inventory of 20 boards at a cost of $25. Then purchases of 130 boards at $27 each, 140 boards at $28 each, and 135 boards at $30 each. If ending inventory is 15 boards and Beach Bum uses

9. Now assume the same information: The Beach Bum Surf Co. is evaluating the inventory of its most popular boogie board as the summer season ends. They had beginning inventory of 20 boards at a cost of $25. Then purchases of 130 boards at $27 each, 140 boards at $28 each, and 135 boards at $30 each. If ending inventory is 15 boards and Beach Bum uses

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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