1. Beginning inventory, purchases, and sales for an inventory item are as follow

Question

1. Beginning inventory, purchases, and sales for an inventory item are as follows: $25 Sep. Beginning inventory34 units 27 units 20 units 18 units 5 Sale 17 Purchase @ $30 30 Sale a. Assuming a perpetual inventory system and the first-in, first-out method, determine (a) the cost of the merchandise sold and (b) the ending inventory on September 30 b. Assuming a perpetual inventory system and the last-in, first-out method, determine (a) the cost of the merchandise sold and (b) the ending inventory on September 30

Explanation / Answer

a FIFO method: Cost of merchandise sold = (27*25)+(7*25)+(11*30)= 1180 Ending inventory = 9*30 = 270 b LIFO method: Cost of merchandise sold = (27*25)+(18*30)= 1215 Ending inventory =(34-27)*25+(20-18)*30= 235

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