**Grays Company Inventory Analysis using FIFO Method**Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold?| Date | Activities | Units Acquired at Cost | Units Sold at Retail ||----------|----------------------|-------------------------------|-----------------------|| August 1 | Beginning inventory | 10 units @ $26 = $260 | || August 3 | Purchase | 20 units @ $28 = $560 | || August 6 | Sales | | 12 units sold |*Multiple Choice*- $304.- $316.- $280.### Explanation of the FIFO Method**FIFO (First-In, First-Out) Method:**Under the FIFO method, the first units purchased are the first ones to be sold. **Calculation:**1. **First 10 units from beginning inventory:** - Cost per unit: $26 - Total cost for 10 units: 10 units * $26 = $2602. **Next 2 units from August 3 purchase:** - Cost per unit: $28 - Total cost for 2 units: 2 units * $28 = $56**Total Cost of Goods Sold (COGS):** - $260 (for the first 10 units) + $56 (for the next 2 units) = $316Thus, the cost of goods sold (COGS) for the 12 units sold is **$316**.Therefore, the correct option is:- $316.

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Description: **Grays Company Inventory Analysis using FIFO Method**Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that

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Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? Date Activities Units Sold at Retail August 1 August 3 Beginning inventory Purchase Units Acquired at Cost 10 units @ $26 = $260 20 units @ $28 = $560 August 6 Sales 12 units sold Multiple Choice O O $304. $316. $280.

Grays Company has the following purchases and sales during the month of August. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 12 units that were sold? Date Activities Units Sold at Retail August 1 August 3 Beginning inventory Purchase Units Acquired at Cost 10 units @ $26 = $260 20 units @ $28 = $560 August 6 Sales 12 units sold Multiple Choice O O $304. $316. $280.

Corporate Financial Accounting

14th Edition

ISBN:9781305653535

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter6: Inventories

Section: Chapter Questions

Problem 6.2BE: Perpetual inventory using FIFO Beginning inventory, purchases, and sales for Item Zeta9 are as...

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