Question

"Teacups Galore utilizes a perpetual inventory system and reported the following transactions for item TCG46:

May 1 Inventory Balance: 306 units at $5 each
May 5 Sold 132 units at $10 each
May 10 Purchased 150 units at $6 each
May 27 Sold 160 units at $10 each
What is the ending balance in inventory on May 31 using the first-in, first out (FIFO) method?"

Answer 1

The ending balance in inventory on May 31 using the FIFO method is 164 units.

Step-by-step explanation:

In order to calculate the ending balance in inventory using the first-in, first-out (FIFO) method, we need to keep track of the order in which the units were purchased.

Based on the transactions given:

1. Starting inventory: 306 units
2. On May 5, 132 units were sold, leaving a balance of 306 - 132 = 174 units remaining
3. On May 10, 150 units were purchased at $6 each. This means the cost of these units is 150 * 6 = $900. This brings the total units to 174 + 150 = 324 units
4. On May 27, 160 units were sold, leaving a balance of 324 - 160 = 164 units remaining

Therefore, the ending balance in inventory on May 31 using the FIFO method is 164 units.