Question

The following lots of Commodity Z were available for sale during the year. Beginning inventory 8 units at $50 First purchase 18 units at $53 Second purchase 25 units at $56 Third purchase 13 units at $58 The firm uses the periodic system, and there are 27 units of the commodity on hand at the end of the year What is the ending inventory balance at the end of the year according to the FIFO method? a. $1,538 b. $1,350 c. $3,481 d. $3,500 < Previous Next Check My Work 210 AM

Answer 1

Answer to Question 1:

Ending inventory of 27 units includes 13 units from third purchase, 14 units from second purchase.

Cost of ending inventory = 13 * $58.00 + 14 * $56.00
Cost of ending inventory = $1,538

Answer to Question 2:

May 10 sale includes 3 units from May 3 purchase, May 20 sale includes 6 units from May 17 purchase and May 23 sale includes 2 units from May 17 purchase

Ending inventory includes 7 units from May 3 purchase, 4 units from May 17 purchase and 10 units from May 30 purchase.

Cost of ending inventory = 7 * $18.00 + 4 * $18.00 + 10 * $19.00
Cost of ending inventory = $388