Question

The following units of an inventory item were available for sale during the year: Beginning inventory 7 units at $50 First purchase 17 units at $53 Second purchase 20 units at $59 Third purchase 18 units at $62 The firm uses the periodic inventory system. During the year, 35 units of the item were sold. The value of ending inventory using FIFO is a. $2,548 b. $1,997 c. $1,318 d. $1,647 Chat Conversation End Type a message...

Answer 1

Answer:

d. $1,647

Explanation:

The computation of the ending inventory using the FIFO method under the  periodic inventory system is shown below:

But before that first we have to determine the ending inventory units which is

= Beginning inventory + first purchase units + first purchase units + first purchase units - sold units

= 7 units + 17 units + 20 units + 18 units - 35 units

= 27 units

Now the ending inventory is

= 18 units × $62 + 9 units × $59

= $1,116 + $531

= $1,647