Question

What is the value ending inventory using a perpetual inventory system and a fifo flow cost assumption

Answer 1

Since we are using a perpetual inventory system,we must examine each transactionind vidually and specifically identify the cost of each unit sold.Since we are us ng F FO (first in,first out),it s assumed that the fil'st un ts purchased will be the first units sold.

Using the detain the problem,the following inventory information can be identified:

Since we are using FIFO,the assumption is that the units being sold come from the earl est purchased units. Theref0<e,280 units so d on September 9 must have come form the April 6 purchase,and some from the July 19 purchase.After the sa e,there will be 290 units (60 + 510·280) remaining from the July 19 purchase. Here is a recap of our inventory after the September 9 sa e: