Question

For the current month, buy n large's beginning inventory included 1,200 units costing $12 per unit. during the month, buy n large made two purchases: 500 units at $13 per unit, and 2,000 units at $13.50 per unit. buy n large also sold 2,150 units during the same month. buy n large uses the periodic inventory system. can you determine the ending inventory with the first-in first-out (fifo) method?

Answer 1

Calculation of the ending inventory with the first-in-first-out (FIFO) method:

Number of units in the ending inventory = Units in the beginning inventory + Units Purchased – Units sold

Number of units in the ending inventory = 1200+(500+2000)-2150 = 1550 units

Under the FIFO method the ending inventory belongs to the latest purchases. Hence, 1550 units shall belong to the latest purchase @ $13.50 per unit.

Hence, Cost of ending inventory using FIFO method = 1550 units @$13.50 = $20,925