Question

 A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 440 units. Ending inventory at January 31 totals 170 units.

 Required:

 Assume the perpetual inventory system is used and then determine the costs assigned to ending inventory when costs are assigned

 based on the FIFO method.

Answer 1

Calculation of Ending Inventory: FIFO
Date	Goods Purchased			Cost of Goods Sold			Inventory Balance
	Units	PU	Total Cost	Units	PU	Total Cost	Units	PU	Total Cost
Beginning Inventory							400	3.9	1560
09-Jan	90	4.1	369				400	3.9	1560
							90	4.1	369
									1929
25-Jan	120	4.2	504				400	3.9	1560
							90	4.1	369
							120	4.2	504
									2433
26-Jan				400	3.90	1560	50	4.10	205
				40	4.10	164	120	4.2	504
Totals	610		2433	440		1,724	170		709

Answer 2

Date	Goods Purchased	Cost of Goods Sold				Inventory Balance
1/1						380	@ $3.70 =	$	1,406
1/9	90 @ $3.90					380	@ $3.70
						90	@ $3.90 =	$	1,757
1/25	120 @ $4.00					380	@ $3.70
						90	@ $3.90
						120	@ $4.00 =	$	2,237
1/26		380	@ $3.70 =	$	1,406	50	@ $3.90
		40	@ $3.90 =		156	120	@ $4.00 =	$	675
				$	1,562