A company sells garden hoses and uses the perpetual inventory system to account

Question

A company sells garden hoses and uses the perpetual inventory system to account for its merchandise. The beginning balance of the inventory and its transactions during September were as follows: September 1: Beginning balance of 18 units at $13 each September 15:

Purchased 30 units at $14 each September 30:

Sold 38 units at $30 selling price each

Using the FIFO inventory valuation method, what is the cost of the ending inventory?

A. $130 B. $135 C. $140 D. $300

Using the LIFO inventory valuation method, what is the cost of the ending inventory?

A. $130

B. $135

C. $140

D. $300

A. $130

B. $135

C. $140

D. $300

Explanation / Answer

Using FIFO Method value of ending inventory

Units in hand = ( 18+30-38) i.e 10 units

Price of 30 units purchased = 14

Value of ending inventory = 10*14 i.e 140

Value of ending inventory using LIFO

= 10*13 i.e 130

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