A company's inventory records report the following: On August 15,it sold 30 units.Using the perpetual FIFO inventory method,what is the value of the inventory at August 15 after the sale?
A)$140
B)$160
C)$210
D)$380
E)$590

Question

A company's inventory records report the following:  On August 15,it sold 30 units.Using the perpetual FIFO inventory method,what is the value of the inventory at August 15 after the sale?
A)$140 
B)$160 
C)$210 
D)$380 
E)$590

Quizplus · Accepted Answer

The perpetual FIFO (First-In-First-Out) inventory method assumes that the first units purchased are the first units sold. To calculate the value of the inventory at August 15 after the sale, we need to know the cost of the units sold and the cost of the remaining units. 
According to the inventory record provided, the cost of each unit is $7. To determine the cost of the 30 units sold, we multiply $7 by 30 to get $210. 
The remaining units in inventory would be 70 (100 units total - 30 units sold). The cost of these remaining units can be calculated using the FIFO method. The cost of the first 70 units purchased was $4 per unit (7 units purchased on July 1, and 63 units purchased on July 12). So, the value of remaining inventory is $4 x 70 = $280. 
Therefore, the total value of the inventory at August 15 after the sale is $210 + $280 = $490. 
The best choice is C ($210).

A Company's Inventory Records Report the Following: on August