Grays Company has inventory of 20 units at a cost of $8 each on August 1. On August 3, it purchased 30 units at $10 each. 22 units are sold on August 6. Using the FIFO perpetual inventory method, what amount will be reported as cost of goods sold for the 22 units that were sold

$180

Explanation:

Under the perpetual inventory method, Inventory balance is adjusted for every purchase or issue.

With FIFO, the system is such that items purchased first are issued out first.

As such, the cost of goods sold for the 22 units issued out will be

= $8 * 20 + $10 * 2

= $160 + $20

= $180

Since FIFO is the method used, 20 items would be sold from the opening inventory balance and then 2 from the items purchased on August 3.

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