sold inventory on account 25000 cogs $12500

Computing Cost of Goods Sold and Ending Inventory using First-in, First-out (FIFO) Method

The Sunshine Company uses a periodic inventory system to manage its inventory. At the end of each accounting period, the company conducts a physical count to determine the number of units in ending inventory. To compute the cost of goods sold and ending inventory, the company applies the first-in, first-out (FIFO) method.

Beginning Balance

The beginning balance of inventory on January 1, 2016, was 400 units at a cost of $18 per unit.

Purchases

During the year 2016, the company made purchases that increased its inventory. The information about these purchases is as follows:

' Sold Inventory on Account 25,000 Cogs $12,500 '

Using this information, we can compute the total cost of goods available for sale.

Cost of Goods Available for Sale

The cost of goods available for sale is the sum of the beginning balance and the cost of purchases.

Cost of Goods Available for Sale = Beginning Balance + Purchases

= 400 units x $18 per unit + 25,000 Cogs - $12,500

= 7,200 + 12,500

= 19,700

Ending Inventory

The company conducted a physical count at the end of December 2016 and found that there were 600 units in ending inventory.

To compute the cost of ending inventory using the FIFO method, we need to identify the most recent purchases. In this case, the most recent purchase was for 25,000 Cogs at $12,500.

Cost of Ending Inventory

The cost of ending inventory is the sum of the cost of the units in ending inventory and the cost of the most recent purchases.

Cost of Ending Inventory = Cost of Units in Ending Inventory + Cost of Most Recent Purchases

= (600 units - 25,000 Cogs) x $18 per unit + 12,500

= 17,400 + 12,500

= 29,900

Cost of Goods Sold

The cost of goods sold is the difference between the cost of goods available for sale and the cost of ending inventory.

Cost of Goods Sold = Cost of Goods Available for Sale - Cost of Ending Inventory

= 19,700 - 29,900

= 10,200

In conclusion, the Sunshine Company used the FIFO method to compute the cost of ending inventory and cost of goods sold. The company found that it had an ending inventory of 600 units at a total cost of $29,900, and it recorded a cost of goods sold of $10,200.

Sold inventory on account 25000 cogs $12500