Required information Problem 8-5 (Algo) Various inventory costing methods [LO8-1, 8-4] [The following information applies to the questions displayed below.] A company began January with 5,000 units of its principal product. The cost of each unit is $8. Inventory transactions for the month of January are as follows: Date of Purchase January 10 January 18 Totals Total Date of Sale January 5 January 12 January 20 Total * Includes purchase price and cost of freight. Sales Units 3,000 5,000 8,000 Problem 8-5 (Algo) Part 1 FIFO Beginning Inventory Purchases: January 10 January 18 Units 2,000 1,000 3,000 6,000 7,000 units were on hand at the end of the month. Required: 1. Calculate January's ending inventory and cost of goods sold for the month using FIFO, periodic system. Purchases Unit Cost* $9 10 Number Cost per of units unit Cost of Goods Available for Sale Cost of Goods Available for Sale 5,000 $8.00 $ 40,000 3,000 $9.00 5,000 $10.00 13,000 $ Total Cost $ 27,000 50,000 $ 77,000 27,000 50,000 117,000 Cost of Goods Sold - Periodic FIFO Number of units sold 0 Cost per unit $ $ $ Cost of Goods Sold 8.00 $ 9.00 10.00 $ 0 0 0 0 Ending Inventory - Periodic FIFO Number of units in ending inventory Cost per unit Ending Inventory $ 8.00 $ $ 9.00 $ 10.00 $ 0 0 0 0

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…