Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise. The beginning balance of the inventory and transactions during January were as follows: $$\begin{array} { | l | r | }
\hline \text { January 1: } & \text { Balance: } 18 \text { units at } \$ 13 \
\hline \text { January 12: } & \text { Purchased } 30 \text { units at } \$ 14 \
\hline \text { January 19: } & \text { Sold } 24 \text { units at } \$ 17 \
\hline \text { January 20: } & \text { Purchased } 24 \text { units at } \$ 17 \
\hline \text { January 27: } & \text { Sold } 27 \text { units } \
\hline
\end{array}$$ If the ending inventory is valued at $357, what inventory cost flow assumption was used?

Question

Trekking Company markets a climbing kit and uses a perpetual inventory system to account for its merchandise. The beginning balance of the inventory and transactions during January were as follows: $$\begin{array} { | l | r | } 
\hline \text { January 1: } & \text { Balance: } 18 \text { units  at } \$ 13 \
\hline \text { January 12: } & \text { Purchased } 30 \text { units  at } \$ 14 \
\hline \text { January 19: } & \text { Sold } 24 \text { units at } \$ 17 \
\hline \text { January 20: } & \text { Purchased } 24 \text { units at } \$ 17 \
\hline \text { January 27: } & \text { Sold } 27 \text { units } \
\hline
\end{array}$$ If the ending inventory is valued at $357, what inventory cost flow assumption was used?

Quizplus · Accepted Answer

The ending inventory is valued at $357, which matches the cost of the oldest units in the inventory using the FIFO method. The cost of the last 10 units sold and the cost of the remaining 20 units in ending inventory were calculated based on the assumption that the oldest units were sold first. Therefore, the FIFO method was used to value the inventory.

Trekking Company Markets a Climbing Kit and Uses a Perpetual