Question

Wildhorse Co. has the following inventory data:

July 1 Beginning inventory 102 units at $19 $1938
7 Purchases 357 units at $20 7140
22 Purchases 51 units at $22 1122 $10200
A physical count of merchandise inventory on July 30 reveals that there are 170 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is:______.
a. $6698.
b. $3298.
c. $3502.
d. $6902.

Answer 1

To calculate the ending inventory using FIFO, all 51 units from the July 22 purchase are counted, along with 119 units from the July 7 purchase, totaling $3502.

Step-by-step explanation:

Using the FIFO inventory method, Wildhorse Co.'s ending inventory amount for July when there are 170 units on hand can be calculated by taking the latest inventory purchases first and working backwards. Therefore, we start with the last purchase:

• 51 units at $22 = $1122 (all these units will be included in the ending inventory as the count is 170).
• After the 51 units have been allocated, we have 119 units to account for (170-51=119).
• Since there were 357 units purchased on the 7th of July at $20, we will take all the 119 remaining units needed for ending inventory from this batch, resulting in 119 units × $20 = $2380.
• Therefore, add the two amounts: $1122 (51 units at $22) + $2380 (119 units at $20) gives us the total amount for the ending inventory which is $3502.

The correct answer is c. $3502.

Answer 2

Wildhorse Co.

Using the FIFO inventory method, the amount allocated to ending inventory for July is:______.

c. $3502.

Step-by-step explanation:

a) Data and Calculations:

Date Description Units Unit Cost Total Cost

July 1 Beginning inventory 102 $19 $1,938

July 7 Purchases 357 $20 7,140

July 22 Purchases 51 $22 1,122

July 30 Total available for sale 510 $10,200

July 30 Ending inventory 170

July 30 Units sold 340

Value of Ending inventory using FIFO:

Date Description Units Unit Cost Total Cost

July 7 Purchases 119 $20 $2,380

July 22 Purchases 51 $22 1,122

Total value of ending inventory 170 $3,502

Cost of goods sold using FIFO:

Cost of goods available for sale = $10,200

Less Ending inventory 3,502

Cost of goods sold $6,698