During the year, Wright Company sells 460 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year. Number of Units Date Jan. 1 Transaction Beginning inventory Purchase Unit Cost Total Cost $80 $3,200 19,920 16,720 40 May 5 Nov. 3 240 83 Purchase 190 88 470 $ 39,840 Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO.

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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During the year, Wright Company sells 460 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year.

| Date  | Transaction         | Number of Units | Unit Cost | Total Cost |
|-------|---------------------|-----------------|-----------|------------|
| Jan. 1| Beginning inventory | 40              | $80       | $3,200     |
| May 5 | Purchase            | 240             | $83       | $19,920    |
| Nov. 3| Purchase            | 190             | $88       | $16,720    |
|       |                     | 470             |           | $39,840    |

Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO.

#### FIFO Inventory Method

|                       | Cost of Goods Available for Sale              | Cost of Goods Sold                         | Ending Inventory                        |
|-----------------------|-----------------------------------------------|--------------------------------------------|-----------------------------------------|
|                       | # of units | Average Cost per unit | Cost of Goods Available for Sale | # of units | Average Cost per unit | Cost of Goods Sold | # of units | Average Cost per unit | Ending Inventory |
| Beginning Inventory   | 40         | $80                   | $3,200                          | 40         | $80                   | $3,200            |            |                       |                  |
| Purchases             |            |                       |                                 |            |                       |                   |            |                       |                  |
| May 5                 | 240        | $83                   | 19,920                          | 240        | $83                   | 19,920            |            |                       |                  |
| Nov. 3                | 190        | $88                   | 16,720                          |            |                       |                   |            |                       |                  |
| Total                 | 470        |                       | $39,840                         |            |                       |                   |            |                       |                  |

In this exercise, the First-In, First-Out (FIFO) method assumes that the oldest inventory items are sold first. The visual breakdown provides the units, cost per unit, and total costs for both inventory and purchases, along with the calculations necessary to determine the ending inventory and cost of goods sold under the FIFO methodology.
Transcribed Image Text:During the year, Wright Company sells 460 remote-control airplanes for $120 each. The company has the following inventory purchase transactions for the year. | Date | Transaction | Number of Units | Unit Cost | Total Cost | |-------|---------------------|-----------------|-----------|------------| | Jan. 1| Beginning inventory | 40 | $80 | $3,200 | | May 5 | Purchase | 240 | $83 | $19,920 | | Nov. 3| Purchase | 190 | $88 | $16,720 | | | | 470 | | $39,840 | Calculate ending inventory and cost of goods sold for the year, assuming the company uses FIFO. #### FIFO Inventory Method | | Cost of Goods Available for Sale | Cost of Goods Sold | Ending Inventory | |-----------------------|-----------------------------------------------|--------------------------------------------|-----------------------------------------| | | # of units | Average Cost per unit | Cost of Goods Available for Sale | # of units | Average Cost per unit | Cost of Goods Sold | # of units | Average Cost per unit | Ending Inventory | | Beginning Inventory | 40 | $80 | $3,200 | 40 | $80 | $3,200 | | | | | Purchases | | | | | | | | | | | May 5 | 240 | $83 | 19,920 | 240 | $83 | 19,920 | | | | | Nov. 3 | 190 | $88 | 16,720 | | | | | | | | Total | 470 | | $39,840 | | | | | | | In this exercise, the First-In, First-Out (FIFO) method assumes that the oldest inventory items are sold first. The visual breakdown provides the units, cost per unit, and total costs for both inventory and purchases, along with the calculations necessary to determine the ending inventory and cost of goods sold under the FIFO methodology.
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