Question

Nichols, Inc. had the following balances and transactions during​ 2018:

Beginning Merchandise Inventory as of January​ 1, 2018	300 units at $80
March 10	Sold 60 units
June 10	Purchased 600 units at $85
October 30	Sold 360 units

What would be reported for Ending Merchandise Inventory on the balance sheet at December​ 31, 2018 if the perpetual inventory system and the

first−​in, first−out inventory costing method are​ used?

A. 40,800

B. 51,000

C. 24,000

D. 4,800

Answer 1

Correct Answer:

Option: Ending Inventory: $ 40,800

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	300	$                             80.00	$         24,000
Purchases	600	$                             85.00	$         51,000
Total	900		$         75,000

	FIFO
A	Total Units Available for sale			900			$              75,000
	Units Sold			420
	Ending Inventory Units			480
	Valuation
	Cost of Goods Sold		300		$           80.00		$              24,000
			120		$           85.00		$              10,200
B	Total Cost of Goods Sold		420	units			$              34,200
A-B	Ending Inventory		480	units			$              40,800

End of Answer.

Thanks