I learned a lot from this video, thank you. I have a question: when you do the physical count, you can get the quantity of the inventory but not the value of the inventory. Could you please explain how did you get the value($1600) for ending inventory?
If you purchased the inventory, then the ending inventory would be what you initially paid for it. If you are making/producing the inventory, then your ending inventory will be: new purchases + beginning inventory - cost of goods sold = ending inventory I have a video on calculating Cost of Goods Sold if you need extra guidance: www.edspira.com/topic/cost-goods-sold/ Great question!
If I have multiple sales, which one do I start with when calculating cost of goods sold in a scenario like this? Is it the one that happened the most recently, or the earliest one?
Doing the math, you see that GAFS (Goods Available for Sale) is 75 units (i.e. 20 + 30 + 25 = 75). Also, we know that 40 units sold, so there are 35 units left (i.e. 75 - 40 = 35). Under FIFO, all that remains are the most recent purchases for ending inventory, thus $1,600 (i.e. 25 * 50 + 10 * 40 = 1600).
