Samson Company had the following balances and transactions during 2013. What would the company's Inventory amount be on the December 31, 2013 balance sheet if the perpetual First-In, First-Out costing method is used? (Answers are rounded to the nearest dollar.)

Question

Samson Company had the following balances and transactions during 2013.  What would the company's Inventory amount be on the December 31, 2013 balance sheet if the perpetual First-In, First-Out costing method is used? (Answers are rounded to the nearest dollar.)

Quizplus · Accepted Answer

Using the perpetual first-in, first-out (FIFO) costing method, the cost of goods sold and cost of ending inventory are calculated using the cost of the oldest inventory first.

Beginning inventory = $80
Purchase on March 15 = $120
Purchase on July 9 = $180
Purchase on November 21 = $240
Total cost of goods available for sale = $620

On December 11, 900 units were sold, leaving 300 units in ending inventory.

Cost of goods sold calculation:
- 400 units sold from beginning inventory: $80 x 400 = $32,000
- 250 units sold from the July 9 purchase: $180 x 250 = $45,000
- 250 units sold from the November 21 purchase: $240 x 250 = $60,000
- Total cost of goods sold = $32,000 + $45,000 + $60,000 = $137,000

Cost of ending inventory calculation:
- 50 units from March 15 purchase = $120 x 50 = $6,000
- 50 units from July 9 purchase = $180 x 50 = $9,000
- 200 units from November 21 purchase = $240 x 200 = $48,000
- Total cost of ending inventory = $6,000 + $9,000 + $48,000 = $63,000

Therefore, the inventory amount on the December 31, 2013 balance sheet if the perpetual FIFO costing method is used is $560 (300 units x $188 per unit).

Samson Company Had the Following Balances and Transactions During 2013