Question

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 320 units. Ending inventory at January 31 totals 140 units.

Units	Unit Cost
Beginning inventory on January 1	290	$	2.70
Purchase on January 9	70		2.90
Purchase on January 25	100		3.04

Required:
Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method. Use a table.

Answer 1

Answer)

Calculation of cost of ending inventory using FIFO Method under Perpetual inventory system

Date	Purchases	Cost of Goods Sold	Balance Inventory
Quantity	Cost per Unit (In $)	Total Cost (In $)	Quantity	Cost per Unit (In $)	Total Cost (In $)	Quantity	Cost per Unit (In $)	Total Cost (In $)
January'1							290	2.70	783.00
January'9	70	2.90	203.00				290	2.70	783.00
							70	2.90	203.00
January'25	100	3.04	304.00				290	2.70	783.00
							70	2.90	203.00
							100	3.04	304.00
January'26				290	2.70	783.00	40	2.90	116.00
				30	2.90	87.00	100	3.04	304.00
Total	170		507.00	320		870.00	140		420.00

Therefore the cost of 140 units of ending inventory under FIFO method using perpetual inventory system is $ 420.