**Perpetual Inventory Using FIFO**Beginning inventory, purchases, and sales for Item HM46 are as follows:- **August 1:** - Inventory: 79 units @ $25- **August 9:** - Sale: 57 units- **August 13:** - Purchase: 92 units @ $26- **August 28:** - Sale: 27 unitsAssuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine:(a) the cost of merchandise sold on August 28 and (b) the inventory on August 31.a. Cost of merchandise sold on August 28: $ [ ]b. Inventory on August 31: $ [ ]**Explanation of FIFO Method:**FIFO (First-In, First-Out) means that the oldest inventory items (first-in) are recorded as sold first (first-out). This method is crucial for accurately reflecting the cost of inventory over time.**Steps to Determine the Answers:**1. **Calculate the cost of goods sold (CGS) for each sale**: - For the sale on August 9: 57 units sold from the initial inventory of 79 units at $25. \[ \text{CGS on August 9} = 57 \text{ units} \times \$25 = \$1425 \] Remaining inventory after this sale: \[ 22 \text{ units at } \$25 \] - For the sale on August 28: 27 units sold from the remaining inventory. \[ \text{CGS on August 28} = 22 \text{ units} \times \$25 + 5 \text{ units} \times \$26 \] \[ \text{CGS on August 28} = 22 \text{ units} \times \$25 = \$550 \] Since only 22 units are left at $25, additional 5 units will be from the August 13 purchase: \[ \text{CGS on August 28} = \4. Adding together $550 + (5 \text{ units} \times \$26) = \$550 + \$130 = \$680 \]2. **Calculate remaining inventory** on August 31: -

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Description: **Perpetual Inventory Using FIFO**Beginning inventory, purchases, and sales for Item HM46 are as follows:- **August 1:** - Inventory: 79 units @ $25- **August 9:** - Sale: 57 units- **August 13:** - Purchase: 92 units @ $26- **August 28:** - Sal

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Beginning inventory, purchases, and sales for Item HM46 are as follows: August 1 Inventory 79 units @ $25 9 Sale 57 units 13 Purchase 92 units @ $26 28 Sale 27 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on August 28 and (b) the inventory on August 31. a. Cost of merchandise sold on August 28 b. Inventory on August 31 %24

Beginning inventory, purchases, and sales for Item HM46 are as follows: August 1 Inventory 79 units @ $25 9 Sale 57 units 13 Purchase 92 units @ $26 28 Sale 27 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on August 28 and (b) the inventory on August 31. a. Cost of merchandise sold on August 28 b. Inventory on August 31 %24

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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