Answer to Question #110109 in Accounting for Joe

Question

A business uses a perpetual system in the first in first out method. The business has the following transactions; Colon inventory on July 1, 2019 consist of 10 units at $12 per unit. Purchase 20 units for $15 per unit on account on July 2, 2019. Sell 15 units for $20 per unit to a customer on account on July 10, 2019. Prepare the entry the business should make to record the sale on July 10, 2019.

Answer 1

on July 10, 2019:

Debit settlements with customers Credit revenue - 180

($15\times12=180)$

The  First-In, First-Out (FIFO) method assumes that the first unit making its way into inventory–or the oldest inventory–is the sold first.