Question

Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: Sept. 1 Inventory 20 units at $20 4 Sale 10 units 10 Purchase 30 units at $25 17 Sale 20 units 30 Purchase 10 units at $30 If Addison uses FIFO, the cost of the ending merchandise inventory on September 30 is a.$650 b.$750 c.$700 d.$800

Answer 1

Answer:

correct option is d.$800

Explanation:

given data

Sept. 1 Inventory =  20 units at $20

Sept.  4  Sale = 10 units

Sept. 10 Purchase = 30 units at $25

Sept. 17 Sale = 20 units

Sept. 30 Purchase = 10 units at $30

to find out

uses FIFO, the cost of the ending merchandise inventory

solution

we use here FIFO

Date              Particulars                Workings                      Amount

Sep 1             Opening inventory   20 units × $20              $400

Sep 4            Sales                          10 units * $20               $200

Sep 10           Purchase                    30 units * $25             $750

Sep 17           Sales        (10 units * $20) + (10 units * $25) $450

Sep 30          Purchase                    10 Units * $30               $300

Closing inventory as per FIFO                                             $800

so correct option is d.$800