Question

Calculate the value of the T-shirt ending inventory using FIFO in the following situation. By the Sea T-shirts had 50 T-shirts bought at wholesale for $3 remaining in inventory from July. During the month of August, the store bought another 75 shirts at $3, and 60 shirts at $3.25. That month the store sold 115 T-shirts. What is the value of the remaining inventory If Laura, the store's owner, uses FIFO and the Periodic system? [She uses a quarterly accounting cycle.]

a) $187.50
b) $210.00
c) $192.50
d) $217.50

Answer 1

In a given situation, Laura uses FIFO and the Periodic system to calculate the value of the T-shirt ending inventory. The value of the remaining inventory is $227.50. The correct answer is $227.50 (option d).

Step-by-step explanation:

In the given situation, Laura, the store owner, uses FIFO (First In, First Out) and the Periodic system to calculate the value of the ending inventory of T-shirts. FIFO assumes that the first items purchased are the first items sold or used.

Let's calculate the value of the remaining inventory:

1. In July, 50 T-shirts were bought at $3 each, so the cost of T-shirts in July is 50 * $3 = $150.
2. In August, 75 T-shirts were bought at $3 each, so the cost of T-shirts in August is 75 * $3 = $225.
3. In August, 60 T-shirts were bought at $3.25 each, so the cost of T-shirts in August is 60 * $3.25 = $195.
4. In total, the cost of T-shirts purchased is $150 + $225 + $195 = $570.
5. The number of T-shirts sold in August is 115.
6. The remaining inventory is 50 (from July) + 75 (from August) + 60 (from August) - 115 (sold) = 70 T-shirts.
7. The value of the remaining inventory is 70 * $3.25 = $227.50.

Therefore, the correct answer is $227.50 (option d).