Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September:
$\begin{array} { r l l } \text { Sept. } 1 & \text { Inventory } & 20 \text { units at } \$ 20 \ 4 & \text { Sale } & 10 \text { units } \ 10 & \text { Purchase } & 30 \text { units at } \$ 25 \ 17 & \text { Sale } & 20 \text { units } \ 30 & \text { Purchase } & 10 \text { units at } \$ 30 \end{array}$
-If Addison uses FIFO, the cost of the ending merchandise inventory on September 30 is
A) $800
B) $650
C) $750
D) $700

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first units purchased are the first units sold. Therefore, the ending inventory consists of the units purchased on September 10 and September 30. The cost of the ending inventory is:10 units x $25 = $25010 units x $30 = $300Total cost of ending inventory = $550

Addison, Inc -If Addison Uses FIFO, the Cost of the Ending Merchandise