Principles of Financial Accounting, Chapters 1-17 - With Access (Looseleaf)
22nd Edition
ISBN: 9781259582394
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 6, Problem 1MCQ
Perpetual: Assume that Marvel uses a perpetual FIFO inventory system. What is the dollar value of its ending inventory?
- a. $2,940
- b. $2,685
- c. $2,625
- d. $2,852
- e. $2,705
Expert Solution & Answer
To determine
Find the dollar value of Company M’s ending inventory.
Answer to Problem 1MCQ
Option (a): $2,940.
Explanation of Solution
First-in-First-Out (FIFO): In this method, items purchased initially are sold first. Therefore, the value of the ending inventory contains the recent cost for the remaining unsold items.
Find the dollar value of Company M’s ending inventory:
| Date | Goods Purchased | Cost of Goods Sold | Ending Inventory | |||
| July-01 | beginning balance | 75 units @$25 | $ 1,875 | |||
| July-03 | 348 units @ $27 | $ 9,396 | 75 units @$25 | $ 11,271 | ||
| 348 units @ $27 | ||||||
| July-08 | 75 units @ $25 | $ 7,950 | 123 units @ $27 | $ 3,321 | ||
| 225 units @ $27 | ||||||
| July-15 | 257 units @ $28 | $ 7,196 | 123 units @ $27 | $ 10,517 | ||
| 257 units @ $28 | ||||||
| July-23 | 123 units @ $27 | $ 7,577 | 105 units @ $28 | $ 2,940 | ||
| 152 units @ $28 | ||||||
Table (1)
The above calculation is matching with the option (a) $2,940. Hence, option (a) is the correct answer, options (b) (c) and (d) are incorrect.
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Chapter 6 Solutions
Principles of Financial Accounting, Chapters 1-17 - With Access (Looseleaf)
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