Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Financial Accounting

4. Merchandising Operations

Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Under a perpetual inventory system using the FIFO method, if a company produces raincoats in three batches at costs of $20, $22, and $24 respectively, what is the total cost of production associated with the 3rd raincoat sold?

$24

$22

$66

$20

Previous problemNext problem

Verified step by step guidance

Understand the FIFO (First-In, First-Out) method: Under FIFO, the oldest inventory costs are used first when calculating the cost of goods sold. This means the first items produced or purchased are the first ones sold.

Identify the costs of the three batches of raincoats: Batch 1 costs $20 per raincoat, Batch 2 costs $22 per raincoat, and Batch 3 costs $24 per raincoat.

Determine the sequence of sales: Since the FIFO method is used, the first raincoat sold will come from Batch 1 ($20), the second raincoat sold will also come from Batch 1 ($20), and the third raincoat sold will come from Batch 2 ($22).

Calculate the cost associated with the third raincoat sold: Since the third raincoat sold comes from Batch 2, its cost is $22.

Verify the logic: Ensure that the FIFO method was applied correctly by checking the sequence of costs used for the sold items and confirming that the third raincoat sold corresponds to the second batch's cost.