Question

Our company had the following balances and transactions during the current year related to merchandise inventory.

Beginning merchandise inventory on January 1	120 units at $70 per unit
Purchase on February 14	100 units at $85 per unit
Sale on August 21	120 units

What would be the company’s ending merchandise inventory in dollars on December 31 if the company used perpetual, first in, first out (FIFO) method?

Group of answer choices

$9,900

$8,500

$8,400

$7,000

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
Jan-01							120	70	8,400
Feb-14	100	85	8,500				120	70	8,400
							100	85	8,500
Aug-21				120	70	8,400	100	85	8,500
Total						8,400			8,500

the company’s ending merchandise inventory in dollars on December 31 if the company used perpetual, first in, first out (FIFO) method = $8,500

Second option is correct.

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