Assume that three identical units of merchandise are purchased during October, as follows: Assume one unit is sold on October 31 for $28. Determine cost of goods sold, gross profit, and ending inventory under the FIFO method.

FIFO

"First In, First Out," an inventory valuation method where the first items purchased or produced are the first ones sold, impacting the value of remaining inventory.

Gross Profit

The financial measure obtained by subtracting the cost of goods sold from total sales revenue.

Ending Inventory

The worth of products ready for sale at the close of a financial period, determined by adding acquisitions to the initial stock and then deducting the expense of the goods that were sold.