Question

A company has inventory of 17 units at a cost of $11 each on May 1. On May 5, they purchased 11 units at $16 per unit. On May 12, they purchased 18 units at $17 per unit. On May 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at May 15 after the sale

Answer 1

Answer:

Value of ending inventory on May 15 after sale = $272

Explanation:

The periodic nventory methods calculating inventory through a physical count at the end of the period.

Under FIFO method, the inventory that is purchased first is the one that is sold first. Thus, a sale of 30 units on May 15 will be made from:

Cost of sales:

17 units at $ 11 = 187

11 units at $ 16 = 176

Remaining units = 30 - (17+11) = 2

The 2 units will be taken from units purchased on May 12.

The ending inventory, thus, will be 18 - 2 = 16units at $17 per unit

Value of ending inventory on May 15 after sale = 16 * 17 = $272