Principles of Financial Accounting.
Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Textbook Question
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Chapter 6, Problem 1MCQ

Perpetual: Assume that Marvel uses a perpetual FIFO inventory system. What is the dollar value of its ending inventory?

  1. a. $2,940
  2. b. $2,685
  3. c. $2,625
  4. d. $2,852
  5. e. $2,705
Expert Solution & Answer
Check Mark
To determine

Find the dollar value of Company M’s ending inventory.

Answer to Problem 1MCQ

Option (a): $2,940.

Explanation of Solution

First-in-First-Out (FIFO): In this method, items purchased initially are sold first. Therefore, the value of the ending inventory contains the recent cost for the remaining unsold items.

Find the dollar value of Company M’s ending inventory:

DateGoods PurchasedCost of Goods SoldEnding Inventory
July-01beginning balance75 units @$25$ 1,875
July-03348 units @ $27$ 9,39675 units @$25$ 11,271
348 units @ $27
July-0875 units @ $25$ 7,950123 units @ $27$ 3,321
225 units @ $27
July-15257 units @ $28$ 7,196123 units @ $27$ 10,517
257 units @ $28
July-23123 units @ $27$ 7,577105 units @ $28$ 2,940
152 units @ $28

Table (1)

The above calculation is matching with the option (a) $2,940. Hence, option (a) is the correct answer, options (b) (c) and (d) are incorrect.

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Chapter 6 Solutions

Principles of Financial Accounting.

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