M7-11 to 13 Calculating Cost of Goods Available for Sale, Cost of Goods Sold, and Ending Inventory under Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3] [The following information applies to the questions displayed below.] In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 300 units at $7 on January 1, (2) 450 units at $8 on January 8, and (3) 750 units at $9 on January 29. M7-11 Calculating Cost of Goods Available for Sale, Cost of Goods Sold, and Ending Inventory under Periodic FIFO [LO 7-3] Assuming 900 units are on hand at the end of the month, calculate the cost of goods available for sale, ending inventory, and cost of goods sold under FIFO. Assume a periodic inventory system is used. (Round "Cost per Unit" to 2 decimal places.)

Cost of Goods available for sale - $7,950/-

Ending Inventory - 900 units

Cost of goods Sold - $4,500/-

Explanation:

As per the FIFO method, the first in first out approach is used for sale of books i.e what is purchased first is sold first and the subsequent purchases are sold on older inventory sold first basis.

In this case the purchases made during the month are detailed below :

Jan 1          300units*$7 = $2,100/-

Jan 8         450units*$8 = $3,600/-

Jan 29       750units*$9 = $6,750/-

Therefore total units purchased is 300+450+750 = 1,500 units. Of the purchases of 1,500 units, 900 units are on hand at the end of the month. So 1,500-900=600 units are sold and the FIFO method is used. Therefore the Jan 1 purchase is completely sold and out of the Jan 8 purchase, 300 units are sold and remaining units of the Jan 8 purchases is 150*$8=$1,200. The Jan 29 purchase is fully available. Hence cost of good available for sale is $1,200+$6,750=$7,950/-

Ending inventory in units is 150+750=900 units. Cost of goods sold is $2,100+(300units*$8) = $2,100+$2,400 = $4,500/-

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