McCarthy Company has inventory of 8 units at a cost of $200 each on October 1.On October 2,it purchased 20 units at $205 each.11 units are sold on October 4.Using the FIFO perpetual inventory method,what is the value of inventory after the October 4 sale?
A)$3,485.
B)$3,445.
C)$3,500.
D)$3,472.
E)$3,461.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method assumes that the first units purchased are the first units sold. Therefore, the 11 units sold on October 4 are assumed to be the 8 units purchased on October 1 at $200 each and 3 units purchased on October 2 at $205 each. The value of inventory after the October 4 sale is:(8 units x $200) + (3 units x $205) = $3,445

McCarthy Company Has Inventory of 8 Units at a Cost