Question

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 420 units. Ending inventory at January 31 totals 170 units. Beginning inventory on January 1 Purchase on January 9 Purchase on January 25 Units 380 90 120 Unit Cost $ 3.70 3.90 4.00 Required: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.

Answer 1

	Goods purchased		cost of goods sold			Inventory Balance
date	No. of units	cost per unit	No. of units sold	cost per unit	cost of goods sold	No. of units	cost per unit	Inventory balance
1-Jan						380	3.7	1406
9-Jan	90	3.9				380	3.7	1406
						90	3.9	351
25-Jan	120	4				380	3.7	1406
						90	3.9	351
						120	4	480
26-Jan			380	4	1520
			40	3.9	156	50	3.9	195
						120	4	480
totals					1676			675