Question

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 370 units. Ending inventory at January 31 totals 150 units. Units Unit Cost Beginning inventory on January 1 330 $ 3.20 Purchase on January 9 80 3.40 Purchase on January 25 110 3.50 Required: Assume the perpetual inventory system is used and then determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.

Answer 1

Solution:

Computation of ending inventory under FIFO
Date	Beginning inventory			Purchases			Cost of Goods sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
01-Jan	330	$3.20	$1,056.00	0	$0.00	$0.00	0	$0.00	$0.00	330	$3.20	$1,056.00
09-Jan	330	$3.20	$1,056.00	80	$3.40	$272.00	0	$0.00	$0.00	330	$3.20	$1,056.00
										80	$3.40	$272.00
25-Jan	330	$3.20	$1,056.00	110	$3.50	$385.00	0	$0.00	$0.00	330	$3.20	$1,056.00
	80	$3.40	$272.00							80	$3.40	$272.00
										110	$3.50	$385.00
26-Jan	330	$3.20	$1,056.00	0	$0.00	$0.00	330	$3.20	$1,056.00	40	$3.40	$136.00
	80	$3.40	$272.00				40	$3.40	$136.00	110	$3.50	$385.00
	110	$3.50	$385.00
Ending Inventory										150		$521.00

Therefore, Cost assigned to ending inventory = $521