ExpertHard1 markMultiple Choice
CPA · Question 44 · Area II: Balance Sheet Accounts
Riverside Corp. has the following inventory information using the FIFO method:<br/>- Beginning inventory: 1,000 units at $15 each<br/>- Purchase 1: 2,000 units at $16 each<br/>- Purchase 2: 1,500 units at $18 each<br/>- Purchase 3: 500 units at $20 each<br/>- Units sold: 3,200 units<br/><br/>What is the cost of goods sold under FIFO?
Riverside Corp. has the following inventory information using the FIFO method:<br/>- Beginning inventory: 1,000 units at $15 each<br/>- Purchase 1: 2,000 units at $16 each<br/>- Purchase 2: 1,500 units at $18 each<br/>- Purchase 3: 500 units at $20 each<br/>- Units sold: 3,200 units<br/><br/>What is the cost of goods sold under FIFO?
Answer options:
A.
$51,200
B.
$52,800
C.
$50,600
D.
$54,400
How to approach this question
Under FIFO, cost of goods sold uses the oldest inventory costs first. Start with beginning inventory, then use purchases in chronological order until reaching the total units sold.
Full Answer
C.$50,600✓ Correct
$50,600
Under FIFO, the 3,200 units sold come from the oldest inventory: Beginning inventory 1,000 units @ $15 = $15,000; Purchase 1: 2,000 units @ $16 = $32,000; Purchase 2: 200 units @ $18 = $3,600. Total COGS = $50,600.
Common mistakes
Using LIFO cost flow instead of FIFO, miscounting units sold, or calculation errors in extensions
Practice the full CPA FAR Practice Exam 2
50 questions · hints · full answers · grading
More questions from this exam
Q01Madison Inc. reported the following for Year 1:<br/>- Net income: $200,000<br/>- Depreciation exp...HardQ02Apex Corp. owns a manufacturing facility with the following data at year-end:<br/>- Net carrying ...HardQ03On January 1, Year 1, Corbin Co. enters a 5-year lease for equipment. Annual lease payments of $1...HardQ04Riverview City received a $300,000 grant from the state government restricted exclusively for roa...HardQ05Summit Corp. has the following book-to-tax differences at December 31, Year 1 (enacted tax rate: ...Hard