Question

Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 \) 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

1. Prepare a perpetual inventory record for the merchandise inventory using the FIFO inventory costing method.

Short answer

The ending inventory under the FIFO method comes out to be $1,410.

Step-by-step solution

Step-by-Step SolutionStep 1: FIFO Method

FIFO method computes the cost of issued inventory based on the sequence of first in first out. Thus whenever any unit is sold, its cost is matched with the earliest purchased inventory assuming that the inventory would be issued in the first-in-first-out method.

Perpetual inventory table under the FIFO method

	Purchases			Cost of goods sold			Inventory on hand
Date	Qty	Unit cost	Total Cost	Qty	Unit cost	Total Cost	Qty	Unit Cost	Total Cost
Aug 1							50	$35	$1,750
Aug 3				45	$35	$1,575	5	$35	$175
Aug 8	90	$54	$4,860				5 90	$35 $54	$5,035
Aug 21				5 80	$35 $54	$4,495	10	$54	$540
Jan 26	15	$58	$870				10 15	$54 $58	$1,410
Total	105		$5,730	130		$6,070	10 15	$54 $58	$1,410