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VladimirAG [237]
2 years ago
12

Knowledge Check 01 Assume that we use a perpetual inventory system and that five identical units are purchased at the following

dates and costs: April 5 $10 April 10 $12 April 15 $14 April 20 $16 April 22 $17 One unit is sold on April 25. The company uses the first-in, first-out (FIFO) inventory costing method. Identify the cost of the ending inventory on the balance sheet.
Business
1 answer:
Natasha2012 [34]2 years ago
6 0

Answer:

$59

Explanation:

Under the First in first out inventory valuation system, items sold are sold based on date of purchase i.e items that were first purchased will be sold before items purchased subsequently.

This is usually adopted for perishable inventory or inventories with expiration periods.

As such, the items sold on April 25 will be the one purchased on April 5, hence ending inventory balance

= $12 + $14 + $16 + $17

= $59

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