Question

Question:Boston Cycles started October with 12 bicycles that cost \(42 each. On October 16, Boston bought 40 bicycles at \)68 each. On October 31, Boston sold 34 bicycles for$100 each.

Preparing a perpetual inventory record and journal entries—FIFO

Requirements

1. Prepare Boston Cycle’s perpetual inventory record assuming the company uses theFIFO inventory costing method.

Short answer

The cost of goods sold under the FIFO method amounts to $2,000.

Step-by-step solution

Step-by-Step-SolutionStep1: FIFO costing method

FIFO is another costing method that estimates the inventory cost in the chronological order of acquiring inventory. The cost of ending inventory under this method is based on the recently purchased inventory.

Perpetual inventory record based on the FIFO method

Date	Purchase / Opening inventory	Sale	Balance
	Unit	Cost	Amount	Unit	Cost	Amount	Unit	Cost	Amount
Oct 1	12	$42	$504				12	$42	$504
Oct 16	40	$68	$2,720				12 40	$42 $68	$3,224
Oct 31				12 22	$42 $68	$2,000	18	$68	$1,224