Question

Five units were purchased at $250 each on July 7. On July 8, three units were sold. On July 15, four units were purchased at $300 each. Under the first in, first out (FIFO) method, what is the value of the inventory on hand and how many units are left?

a) $1,950 and five units
b) $1,950 and seven units
c) $2,000 and five units
d) $2,000 and six units

Answer 1

The value of the inventory on hand is $1,700 and there are six units left under the FIFO method after the transactions described. The options provided in the question do not include this correct answer, suggesting an error in the listed choices.

Step-by-step explanation:

The student has asked about the inventory value and remaining units calculation using the First In, First Out (FIFO) method in accounting. Five units were initially purchased for $250 each, and then three units were sold. Later, another four units were bought for $300 each. To determine the inventory value and remaining units, we apply FIFO, which means we sell the oldest (first-in) units first.Since three of the initial five units were sold, the remaining inventory from the first purchase is two units, valued at $250 each, totaling $500. The four units purchased later at $300 each remain untouched. So, the value of these four units is $1,200. The total value of the inventory on hand then would be $500 + $1,200 = $1,700 and the remaining units are two from the initial batch plus all the four later purchased units, equating to six units in total.Therefore, the main answer for the inventory value is $1,700 and the total number of units left is six units. This makes options a, b, and d as mentioned in the question incorrect. Since the correct option isn't listed in the question, we can conclude that there was a possible error in the provided options.