Question

One identical unit is purchased on each of the following three dates and at the respective costs: June 1 at $10 June 2 at $15 July 4 at $20 The company sells two units during the period. Conclude which inventory items are sold first and which unit remains in ending inventory if the company is using the FIFO cost flow assumption.

Answer 1

The answer is: The two June products are sold first: June 1 at $ 10

June 2 at $ 15, and the product of the month of July is pending: July 4 at $ 20.

Step-by-step explanation:

The FIFO method is an inventory valuation technique whose acronym corresponds to “First In, First Out”. Assume that the cost flow is based on the fact that the first products purchased are also the first products that are sold.

The answer is: The two June products are sold first: June 1 at $ 10

June 2 at $ 15, and the product of the month of July is pending: July 4 at $ 20.

Answer 2

Sold first - June 1 at $10

Sold first - June 2 at $15

Ending inventory - July 4 at $20

Step-by-step explanation:

In the FIFO Method, when the first product is acquired it is sold first or dispose of.

In the given question, one identical unit is purchased on three dates, and the company sold two units

So, the selling units would be

June 1 at $10

June 2 at $15

And, the remaining stock would be considered as an ending inventory i.e July 4 at $20