Rodriguez Company had the following balances and transactions during 2015: $$\begin{array} { | l | l | }
\hline \text { Beginning Merchandise Inventory } & 100 \text { units at } \$ 80 \
\hline \text { March } 10 & \text { Sold } 50 \text { units } \
\hline \text { June 10 } & \text { Purchased } 200 \text { units at } \$ 82 \
\hline \text { October 30 } & \text { Sold } 150 \text { units } \
\hline
\end{array}$$ What would the Ending Merchandise Inventory amount be as reported on the balance sheet at December 31, 2015 if the perpetual first-in, first-out costing method is used?

Question

Rodriguez Company had the following balances and transactions during 2015: $$\begin{array} { | l | l | } 
\hline \text { Beginning Merchandise Inventory } & 100 \text { units at } \$ 80 \
\hline \text { March } 10 & \text { Sold } 50 \text { units } \
\hline \text { June 10 } & \text { Purchased } 200 \text { units at } \$ 82 \
\hline \text { October 30 } & \text { Sold } 150 \text { units } \
\hline
\end{array}$$ What would the Ending Merchandise Inventory amount be as reported on the balance sheet at December 31, 2015 if the perpetual first-in, first-out costing method is used?

Quizplus · Accepted Answer

Using the perpetual first-in, first-out (FIFO) costing method, the cost of the units sold and the cost of the units remaining in inventory must be calculated separately.

Cost of Units Sold:
- 50 units at $80 = $4,000
- 100 units at $82 (remaining beginning inventory) = $8,200
- Total cost of units sold = $12,200

Cost of Units Remaining in Inventory:
- 50 units at $82 (purchased in June) = $4,100
- 150 units at $80 (remaining from June purchase and beginning inventory) = $12,000
- Total cost of units remaining in inventory = $16,100

Therefore, the Ending Merchandise Inventory amount as reported on the balance sheet at December 31, 2015 is $8,200 (the cost of the units remaining in inventory).

The correct answer is (C).

Rodriguez Company Had the Following Balances and Transactions During 2015