Beginning inventory, purchases, and sales for Item Delta are as follows:

Beginning inventory, purchases, and sales for Item Delta are as follows:


July 1 Inventory 50 units at $15
7 Sale 44 units
15 Purchase 90 units at $18
24 Sale 40 units




Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on July 24 and (b) the inventory on July 31.


Answer:

a. Cost of merchandise sold (July 24):
6 units @ $15 $ 90
34 units @ $18 612
40 $702
b. Inventory, July 31: $1,008 = 56 units × $18