McCarthy Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the perpetual FIFO inventory method,what is the value of inventory after the October 4 sale?
A)$3,485.
B)$3,445.
C)$3,500.
D)$3,472.
E)$3,461.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method assumes that the first units purchased are the first units sold. Therefore, the 11 units sold on October 4 are assumed to be from the 8 units purchased on October 1 at a cost of $200 each. The remaining 7 units in inventory are from the 20 units purchased on October 2 at a cost of $205 each. Thus, the value of inventory after the October 4 sale is: (7 units x $205) = $3,485.

McCarthy Company Has Inventory of 8 Units at a Cost