To solve this problem, let's apply the First-In, First-Out (FIFO) method using a perpetual inventory system. In FIFO, the cost of goods sold (COGS) is based on the cost of the oldest inventory available at the time of each sale.

Given Data:

• September 1 - Beginning Inventory: 31 units @ $22
• September 5 - Sale: 18 units
• September 17 - Purchase: 33 units @ $24
• September 30 - Sale: 33 units

Step-by-Step Solution

1. Calculate the Cost of Goods Sold (COGS) for Each Sale

Sale on September 5 (18 units)

Since we have 31 units in the beginning inventory at $22 each, and we are selling 18 units:

• COGS for September 5 = $18 \times 22 = 396$

After the sale, we have:

• Remaining Inventory: $31 - 18 = 13$ units at $22 each

Purchase on September 17 (33 units)

• New Inventory Added: 33 units @ $24 each
• Updated Inventory:
  • 13 units @ $22 (remaining from beginning inventory)
  • 33 units @ $24 (new purchase)

Sale on September 30 (33 units)

Using the FIFO method, we sell the oldest inventory first:

1. First, we sell the remaining 13 units at $22 each:
   • COGS from these 13 units = $13 \times 22 = 286$
2. Then, we need an additional $33 - 13 = 20$ units, which come from the $24 inventory:
   • COGS from these 20 units = $20 \times 24 = 480$

So, the COGS for the September 30 sale is: $286 + 480 = 766$

2. Determine Ending Inventory on September 30

After the September 30 sale, the remaining inventory consists of:

• $33 - 20 = 13$ units at $24 each

Ending Inventory Value: $13 \times 24 = 312$

Final Answers

a. Cost of Goods Sold for the September 30 sale: $766

b. Inventory on September 30: $312

Would you like further clarification on any step?

---

Follow-up Questions

1. How would the COGS change if the company used the Last-In, First-Out (LIFO) method instead?
2. How is the perpetual inventory system different from the periodic inventory system?
3. How would the average cost method affect the ending inventory and COGS?
4. How does the choice of inventory method impact financial statements?
5. What are the tax implications of using FIFO compared to LIFO?

---

Tip: Using FIFO during periods of rising prices results in lower COGS, increasing net income but also increasing taxable income.