Question

Marigold Company's inventory records show the following data: Units Unit Cost Inventory, January 1 9200 $8.00 Purchases: June 18 9300 7.60 November 8 5100 6.00 A physical inventory on December 31 shows 5100 units on hand. Under the FIFO method, the December 31 inventory is

Answer 1

Answer:

$30,600

Explanation:

Under FIFO method, units that are purchased first are sold first.

Given:

Beginning inventory = 9,200 units @$8

Purchases in June = 9,300 units @7.6

Purchases in November = 5,100 units @6

Closing inventory as on December 31 was 5,100 units.

Since the company follows FIFO method of inventory valuation, beginning and purchases made in June are sold first. Remaining 5,100 units purchased in November are not sold as they are left unsold at the time of closing.

So December 31 inventory is computed as 5,100 × 6 = $30,600

Answer 2

Answer:

FIFO method, December 31 inventory value is $30,600

Explanation:

Inventory, January 1    9,200 @ $8.00 = $73,600

Purchases: June 18     9300 @ $7.60 = $70680

November 8               5100 @ $6.00 = $30,600

there are 5100 unit on hand as per physical inventory till December 31

Using FIFO, the cost assigned to these units should be most recent cost, $6 per unit, from the November 8 purchase.

Under FIFO method, December 31 inventory value is

$= 5100 unit \times 6 per unit = 30,600$