Rosierre Company purchased two identical inventory items. One of the items cost $6.00 and was purchased in January. The other was purchased in February, and the company paid $7.00 for this item. One of the items was sold in March at a price of $10.00. Select the correct answer assuming that Rosierre uses a FIFO cost flow assumption.
A) The balance in ending inventory would be $7.00.
B) The amount of gross margin would be $3.00.
C) The amount of ending inventory would be $6.50.
D) The amount of ending inventory would be $6.00.

Question

Quizplus · Accepted Answer

Under FIFO (First-In, First-Out), the first item purchased (costing $6.00) is assumed to be sold first. Therefore, the ending inventory consists of the item purchased in February, which cost $7.00.

Rosierre Company Purchased Two Identical Inventory Items