Linden Supply uses a periodic inventory system. During the year it had beginning inventory of 400 units at $20, a first purchase of 600 units at $23 and a second purchase of 500 units at $25. It sold 1,100 units. What is cost of goods sold under FIFO?

Correct answer: B) $24,300

Explanation

Goods available = 400 x $20 + 600 x $23 + 500 x $25 = $34,300 for 1,500 units. Ending inventory is 400 units; under FIFO these are the most recent purchases at $25, so ending inventory = $10,000. COGS = $34,300 - $10,000 = $24,300. LIFO would give $26,300 and weighted average about $25,153.