Question

A company had the following purchases and sales during its first year of operations:

	Purchases	Sales
January:	10 units at $120	6 units
February:	20 units at $125	5 units
May:	15 units at $130	9 units
September:	12 units at $135	8 units
November:	10 units at $140	13 units

On December 31, there were 26 units remaining in ending inventory. Using the Perpetual FIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

Group of answer choices

A) $3,405.

B) $3,200.

C) $3,365.

D) $3,540.

E) $3,270.

Answer 1

	Available for sale			Cost of goods sold			Ending Inventory
Date	Units	Unit cost	Total Cost	Units	Unit cost	Total Cost	Units	Unit Cost	Total Cost
January							10	120	1,200
January				6	120	720	4	120	480
February	20	125	2,500				4	120	480
							20	125	2,500
February				4	120	480
				1	125		19	125	2,375
May	15	130	1,950				19	125	2,375
							15	130	1,950
May				9	125	1,125	10	125	1,250
							15	130	1,950
September	12	135	1,620				10	125	1,250
							15	130	1,950
							12	135	1,620
September				8	125	1,000	2	125	250
							15	130	1,950
							12	135	1,620
November	10	140	1,400				2	125	250
							15	130	1,950
							12	135	1,620
							10	140	1,400
November				2	125	250	4	130	520
				11	130	1,430	12	135	1,620
							10	140	1,400
Total						5,005			3,540

The cost of the ending inventory = $3,540

Correct option is D.