Question

Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2015 are as follows:

Units Per unit price Total
Balance, 1/1/15 200 $5.00 $1,000
Purchase, 1/15/15 100 5.30 530
Purchase, 1/28/15 100 5.50 550

An end of the month (1/31/15) inventory showed that 160 units were on hand." uses FIFO, what is the value of the ending inventory?

Answer 1

$868

Step-by-step explanation:

FIFO means first in, first out. It means that it is the first purchased inventory that is the first to be sold

The ending inventory would consist of the purchases that were made last.

It would include 100 units of the inventory purchased on 1/28/15 and 60 units of the inventory purchased on 1/15/15

Value of ending inventory = (100 x 5.5) + (60 X 5.3)

= 550 + 318

868