Perpetual Inventory using FIFO The following units of a particular item were available for sale during the calendar year: Jan, 1 Inventory 4,000 units at $50 Apr. 19 Sale 2,500 units June 30 Purchase 4,500 units at $54 Sept. 2 Sale 5,000 units Nov. 15 Purchase 2,000 units at $56 The firm maintains a perpetual inventory system. Determine the cost of goods sold for each sale and the inventory balance after each sale, assuming the first-in, first-out method. Present the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two differ the units with the LOWER unit cost first in the Cost of Goods Sold Unit Cost column and in the Inventory Unit Cost column. Date Jan. 1 Apr. 19 June 30 June 30 Sept. 2 Sept. 2 Nov. 15 Nov. 15 Dec. 31 Purchases Quantity 4,500 2,000 Balances Purchases Unit Cost 54 56 Purchases Total Cost 243,000 112,000 Cost of Goods Sold Quantity 2,500 1,500 3,500 FIFO Method Cost of Goods Sold Unit Cost 000 50 50 54 Cost of Goods Sold Total Cost 125,000 75,000 189,000 389,000 Inventory Quantity 4,000 1,500 1,500 4,500 2,000 Inventory Unit Cost 50 50 50 54 54 54 56 Inventory Total Cost 200,000 75,000 75,000 243,000 112,000

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in…