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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Chapter 6, Problem 6MCQ, Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is

Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30?

a. $32,500

b. $38,400

c. $63,600

d. $69,500

To determine

Concept introduction:

Perpetual Inventory System:

The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

FIFO method:

FIFO Stands for First in First Out. Under this method, the units purchased first are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the latest units purchased.

To calculate:

The cost of ending inventory using the Perpetual FIFO inventory costing method.

Explanation

The cost of goods sold and ending inventory using the Perpetual FIFO inventory costing method is calculated as follows:

Morgan Inc.
Perpectual Inventory Record-FIFO
Purchases Cost of Goods Sold Inventory Balance
Date Unit Rate Total Cost Unit Rate Total Cost Unit Rate Total Cost
Apr. 1 1200 $ 25 $ 30,000
Apr...

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