Q34PGB_1 - Horngren'S Financial And Managerial Accounting

Question

Steel It began January with 55 units of iron inventory that cost \(35 each. During January, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Jan. 3 Sale 45 \) 83

8 Purchase 75 $ 52

21 Sale 70 85

30 Purchase 10 55

 

Requirements

1. Prepare a perpetual inventory record for the merchandise inventory using theFIFO inventory costing method.

Step-by-Step Solution

Answer

The ending inventory under the FIFO method comes out to be $1,330.

Step1: FIFO Method

FIFO method follows the first-in-first-out sequence to compute the cost of issued inventory. So for every issued unit, its cost is matched with the earliest purchased inventory assuming that the inventory would have been issued in a first-in-first-out manner.

Step 2: Perpetual inventory table under the FIFO method