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Financial & Managerial Accounting
Found in: Page 260
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units.

Units

Unit Cost

Beginning Inventory on Jan 1

320

$3.00

Purchase on Jan 9

80

3.20

Purchase on Jan 25

100

3.34

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. (Round per unit costs and inventory amounts to cents.)

Ending inventory totals $494.

See the step by step solution

Step by Step Solution

Definition of FIFO

The method of allocating the cost of the inventory of the business under which cost incurred in acquiring the oldest inventory is allocated first to the cost of goods sold is known as FIFO.

Calculation of Cost Assigned to Ending Inventory

ParticularBeginning Inventory/PurchasesCost of goods soldEnding Inventory
UnitPer unit CostTotalUnitPer unit CostTotalUnitPer unit CostTotal

Beginning Inventory

320

$3

$960

320

$3

$960

9 Jan

80

$3.20

$256

320

$3

$960

80

$3.20

$256

25 Jan

100

$3.34

$334

320

$3

$960

80

$3.20

$256

100

$3.34

$334

26 Jan

320

$3

$960

30

$3.20

$96

50

$3.20

$160

100

$3.34

$334

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