Rally Wheels, Inc. had the following balances and transactions during 2018: $$\begin{array} { | l | l | }
\hline \text { Beginning Merchandise Inventory as of January 1,2018 } & 200 \text { units at } \$ 71 \
\hline \text { March } 10 & \text { Sold } 50 \text { units } \
\hline \text { June } 10 & \text { Purchased } 800 \text { units at } \$ 76 \
\hline \text { October } 30 & \text { Sold } 175 \text { units } \
\hline
\end{array}$$ What would the company's ending merchandise inventory cost be on December 31, 2018 if the perpetual inventory system and the last-in, first-out inventory costing method are used?

Question

Rally Wheels, Inc. had the following balances and transactions during 2018: $$\begin{array} { | l | l | } 
\hline \text { Beginning Merchandise Inventory as of January 1,2018 } & 200 \text { units at } \$ 71 \
\hline \text { March } 10 & \text { Sold } 50 \text { units } \
\hline \text { June } 10 & \text { Purchased } 800 \text { units at } \$ 76 \
\hline \text { October } 30 & \text { Sold } 175 \text { units } \
\hline
\end{array}$$ What would the company's ending merchandise inventory cost be on December 31, 2018 if the perpetual inventory system and the last-in, first-out inventory costing method are used?

Quizplus · Accepted Answer

To calculate the ending merchandise inventory cost using the LIFO method, we need to start with the most recent purchases and work our way back. Here are the steps:

1. Start with the beginning inventory balance: $18,450
2. Add purchases made during the year (Jan-Nov):
   $24,000 + $35,000 + $30,000 + $39,000 + $29,000 + $27,000 + $31,000 + $26,000 + $46,000 = $267,000
3. Subtract the cost of goods sold (COGS) for the year:
   $276,300
4. Calculate the ending inventory balance under the LIFO method:
   $9,150

Therefore, the ending merchandise inventory cost using the perpetual inventory system and the LIFO inventory costing method would be $58,150. Hence, the correct answer is option C, $58,150.

Rally Wheels, Inc What Would the Company's Ending Merchandise Inventory Cost Be on 2018