Question

on january 1, gerhard company has 100 units in beginning inventory. on january 3, the company purchases 500 units; on february 23, 800 units; and on march 19, 1,000 units. if the company sells 100 units on january 4, which units would be assumed to have been sold in a perpetual fifo system versus a period fifo system? multiple choice question. the units in beginning inventory would be assumed to have been sold under both methods. the units purchased on january 3 would be assumed to have been sold for the perpetual fifo method only. the units purchased on march 19 would be assumed to have been sold for the perpetual fifo method only.

Answer 1

In a perpetual FIFO system, the units assumed to have been sold depend on the order of acquisition. The units in the beginning inventory are assumed to have been sold under both methods, while the units purchased on January 3 and March 19 are assumed to have been sold under the perpetual FIFO method only.

Step-by-step explanation:

In a perpetual FIFO (First-In, First-Out) system, the units assumed to have been sold are the ones that were acquired first. Therefore, the units in the beginning inventory would be assumed to have been sold under both the perpetual FIFO and period FIFO methods.

The units purchased on January 3 would be assumed to have been sold for the perpetual FIFO method only, as they were the first units acquired after the beginning inventory.

The units purchased on March 19 would be assumed to have been sold for the perpetual FIFO method only, as they were the most recently acquired units.