Question

QS 5-7A Periodic: Inventory costing with FIFO LO P3

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 450 units. Ending inventory at January 31 totals 170 units.

	Units	Unit Cost
Beginning inventory on January 1	410	$	4.00
Purchase on January 9	90		4.20
Purchase on January 25	120		4.30

  
Required:
Assume the periodic inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.

Answer 1

Requirement:

Particulars	Units	Unit Cost	Cost
Ending Inventory	120	$      4.30	$       516
	50	$      4.20	$       210
Ending Inventory	170		$       726

Note: As per FIFO method recent purchases are considered in calculation of ending inventory