📘 Board Exam Problem: Inventory Valuation Using FIFO
Problem:
Gonzales Company uses a periodic inventory system. The following data relates to its
inventory of Item X during the month of March 2025:
Date
Activity
Units
Unit Cost
Mar 1
Beginning Inv
200
₱50
Mar 5
Purchase
300
₱52
Mar 15
Sale
400
₱90
Mar 20
Purchase
200
₱55
Mar 25
Sale
150
₱95
Required:
1. Compute the ending inventory using the FIFO method.
2. Compute the cost of goods sold (COGS) for the month of March.
✅ Solution:
Step 1: Understand FIFO
FIFO (First-In, First-Out) assumes the oldest inventory is sold first. Therefore:
Beginning inventory and earliest purchases are used to compute COGS.
Latest purchases make up the ending inventory.
Step 2: Track Inventory Flow
� Beginning Inventory:
200 units @ ₱50
🛒
Purchases:
Mar 5: 300 units @ ₱52
