ACCT 201 Principles of Financial Accounting Practice Examination Combined Chapters 5-8 Dr. Fred Barbee Solution to Short-Problem #1

Short Problem #1

A company made the following merchandise purchases and sales during the month of July:

July 1	Purchased	380 units @	$15 each
July 5	Purchased	270 units @	$20 each
July 9	Sold	500 units @	$55 each
July 14	Purchased	300 units @	$24 each
July 20	Sold	250 units @	$55 each
July 30	Purchased	250 units @	$30 each

There was no beginning inventory. If the company uses the first-in, first-out method and the perpetual method what would be the cost of the ending inventory?

Solution

	Purchases			Sales			Balance
Date	Units	Cost	Total	Units	Cost	Total	Units	Cost	Total
07/01	380	$15	$5,700				380	$15	$5,700
07/05	270	$20	$5,400				380 270 650	$15 20	$5,700 5,400 $11,100
07/09				380 120	$15 20	$5,700 2,400	150	$20	$3,000
07/14	300	$24	$7,200				150 300 450	$20 24	$3,000 7,200 $10,200
07/20				150 100	$20 24	$3,000 2,400	200	$24	$4,800
07/30	250	$30	$7,500				200 250 450	$24 30	$4,800 7,500 $12,300