Question

Klump Co.
Klump Co. uses a perpetual inventory system and had the following inventory transactions for the month of June.

June	1	On hand, 50 units at $18.00 each		$ 900.00
	4	Purchased 115 units at $18.20 each		2,093.00
	5	Sold 100 units
	10	Purchased 75 units at $18.25 each		1,368.75
	24	Sold 50 units
		Total cost of goods available for sale		$4,361.75
	30	On hand, 90 units

Refer to the information provided for Klump Co. If the company uses the FIFO inventory costing method, the amount of ending inventory reported on the balance sheet is:

		$1,630.00
		$1,628.00
		$1,641.75
		$1,810.00

1B,  

Klump Co.

Refer to the information provided for Klump Co. The company uses the perpetual inventory system. If the company uses FIFO inventory costing method, cost of goods sold for the month of June is:

		$2,551.75
		$1,820.00
		$2,720.00
		$2,725.00

Answer 1

The correct answer is $1,641.75.

Supporting calculations:

Ending Inventory:	Units (a)	Unit Price (b)	Amount (a*b)
From June 10th Purchases	75	$18.25	$1,369
From June 4th Purchases (90 units - 75 units)	15	$18.20	$273
Ending Inventory under FIFO	90		$1,641.75

Therefore, ending inventory under FIFO is $1,641.75.

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The correct answer is $2,720.

Supporting calculations:

Cost of Goods Sold	Units (a)	Unit Price (b)	Amount (a*b)
Sale on June 5th:
From June 1 on hand	50	$18	$900
From June 4 Purchases (100 - 50)	50	$18.20	$910
Sale on June 24th:
From June 4 Purchases	50	$18.20	$910
Cost of Goods Sold under FIFO	150		$2,720

Therefore, cost of goods sold under FIFO is $2,720.