Question

nventory records for Marvin Company revealed the following: Date Transaction Number of Units Unit Cost Mar. 1 Beginning inventory 1,000 $7.20 Mar. 10 Purchase 600 7.25 Mar. 16 Purchase 800 7.30 Mar. 23 Purchase 600 7.35 ​ Marvin sold 2,300 units of inventory during the month. Ending inventory assuming FIFO would be:

Answer 1

Answer:

Ending inventory= $5,140

Explanation:

Giving the following information:

Mar. 1: Beginning inventory 1,000 $7.20

Mar. 10: Purchase 600 units for $7.25

Mar. 16: Purchase 800 units for $7.30

Mar. 23: Purchase 600 for $7.35

​ Marvin sold 2,300 units of inventory during the month.

Under the FIFO (first-in, first-out) method, the ending inventory is calculated using the cost of the last units purchased.

First, we need to calculate the number of units in ending inventory:

Ending inventory in units= total units - units sold

Ending inventory in units= 3,000 - 2,300= 700 units

Ending inventory= 600*7.35 + 100*7.3= $5,140

Answer 2

Answer:

$5,140

Explanation:

The FIFO method of inventory valuation is one in which items purchase first are sold first. This is specially important for inventory with expiry dates or perishable inventory item.

Date              Transaction     Number of Units       Unit Cost

Mar. 1 Beginning inventory          1,000                  $7.20

Mar. 10 Purchase                             600                  $7.25

Mar. 16 Purchase                             800                  $7.30

Mar. 23 Purchase                             600                   $7.35 ​

Total available                              3,000

Marvin sold 2,300 units. The sale would have included 1000 units from Mar 1, 600 units from Mar 10, 700 units from Mar 16

Balance = (100 * $7.30) + ($7.35 * 600)

= $730 + $4,410

= $5,140