$\begin{array}{l}
\text { Shillings had the following inventory activity during April: }\\
\begin{array} { | l | r | r | r | }
\hline & \text { Units } & \text { Unit cost } & \text { Total cost } \
\hline \text { Beginning inventory } & 800 & \$ 10.00 & \$ 8,000 \
\hline \text { Purchase: April 4 } & 1,400 & 11.00 & 15,400 \
\hline \text { Sale: April 8 } & ( 1,500 ) & & \
\hline \text { Purchase: April 12 } & 900 & 10.50 & 9,450 \
\hline \text { Sales: April 24 } & ( 900 ) & & \
\hline
\end{array}
\end{array}$
-If Shillings is using a perpetual system and the FIFO costing assumption, what is the ending inventory closest to?

Question

$\begin{array}{l}
\text { Shillings had the following inventory activity during April: }\\
\begin{array} { | l | r | r | r | } 
\hline & \text { Units } & \text { Unit cost } & \text { Total cost } \
\hline \text { Beginning inventory } & 800 & \$ 10.00 & \$ 8,000 \
\hline \text { Purchase: April 4 } & 1,400 & 11.00 & 15,400 \
\hline \text { Sale: April 8 } & ( 1,500 ) & & \
\hline \text { Purchase: April 12 } & 900 & 10.50 & 9,450 \
\hline \text { Sales: April 24 } & ( 900 ) & & \
\hline
\end{array}
\end{array}$
-If Shillings is using a perpetual system and the FIFO costing assumption, what is the ending inventory closest to?

Quizplus · Accepted Answer

FIFO (first-in, first-out) means that the first units purchased are the first units sold. Therefore, the ending inventory consists of the units purchased on April 4 and April 12. The total cost of the ending inventory is $15,400 + $9,450 = $24,850. Since 1,400 units were purchased on April 4 at a cost of $11.00 per unit, the cost of the units purchased on April 4 is $11.00 * 1,400 = $15,400. Therefore, the cost of the units purchased on April 12 is $24,850 - $15,400 = $9,450. Since 900 units were purchased on April 12 at a cost of $10.50 per unit, the cost of the ending inventory is $9,450.

-If Shillings Is Using a Perpetual System and the FIFO