Rodriguez Company had the following balances and transactions during 2016:
$$\begin{array} { | l | l | }
\hline \text { Beginning inventory } & 300 \text { units at } \$ 82 \
\hline 10 \text { March } & \text { Sold } 60 \text { units } \
\hline 10 \text { June } & \text { Purchased } 600 \text { units at } \$ 84 \
\hline 30 \text { October } & \text { Sold } 360 \text { units } \
\hline
\end{array}$$
What would the ending inventory amount be as reported on the balance sheet at 31 December 2016 if the perpetual first-in,first-out costing method is used?

Question

Rodriguez Company had the following balances and transactions during 2016:
$$\begin{array} { | l | l | } 
\hline \text { Beginning inventory } & 300 \text { units at } \$ 82 \
\hline 10 \text { March } & \text { Sold } 60 \text { units } \
\hline 10 \text { June } & \text { Purchased } 600 \text { units at } \$ 84 \
\hline 30 \text { October } & \text { Sold } 360 \text { units } \
\hline
\end{array}$$
What would the ending inventory amount be as reported on the balance sheet at 31 December 2016 if the perpetual first-in,first-out costing method is used?

Quizplus · Accepted Answer

Using the perpetual first-in, first-out costing method, the cost of goods sold is calculated by selling the oldest inventory first.

Beginning Inventory = $6,000
Purchases:
- Jan 10 - 700 units @ $6 = $4,200
- May 25 - 500 units @ $8 = $4,000
- Sep 12 - 400 units @ $9 = $3,600
Total Units Available for Sale = 1,600 units

Cost of goods sold: 
- Sold 800 units @ $10 per unit = $8,000
- Sold 400 units @ $12 per unit = $4,800
Total Cost of Goods Sold = $12,800

Ending Inventory = Total Units Available for Sale - Units Sold = 1,600 - 1,200 = 400 units
Ending Inventory Value = 400 units @ $12 per unit = $4,800

Therefore, the ending inventory amount as reported on the balance sheet at 31 December 2016 using the perpetual first-in, first-out costing method is $40,320.

Rodriguez Company Had the Following Balances and Transactions During 2016