Question

The following inventory was available for sale during the year for Tower Tools: Beginning inventory 10 units at $160 First purchase 15 units at $220 Second purchase 30 units at $280 Third purchase 20 units at $260 Tower Tools has 25 units on hand at the end of the year. What is the dollar amount of inventory at the end of the year according to the first-in, first-out method

Answer 1

The dollar amount of inventory at the end of the year according to the First-in, First-out method of inventory valuation is:

$6,600.

Step-by-step explanation:

a) Data and Calculations:

Beginning inventory 10 units at $160 $1,600

First purchase 15 units at $220 3,300

Second purchase 30 units at $280 8,400

Third purchase 20 units at $260 5,200

Total 75 units $18,500

Ending inventory 25 units

Cost of goods sold 50 units

Ending inventory under First-in, First-out method:

20 units at $260 = $5,200

5 units at $280 = 1,400

25 units = $6,600

Cost of goods sold = Cost of goods available for sale minus ending inventory = $18,500 - 6,600 = $11,900