Question

1. A company purchased the following units of an inventory during the year:

Beginning inventory 10 units at $55
First purchase 25 units at $60
Second purchase 30 units at $65
Third purchase 15 units at $70
They use the periodic inventory system. During the year, 50 units of the item were sold. Using FIFO, the value of ending inventory is which of the following?
a. $1,350.
b. $1,150.
c. $1,375.
d. $1,250.

Answer 1

$2,025

Step-by-step explanation:

The computation of the value of the ending inventory is shown below:

But before that first we have to calculate the ending inventory units which is

= Beginning inventory + first purchase units + second purchase units + third purchase units - sold units

= 10 units + 25 units + 30 units + 15 units - 50 units

= 30 units

Now the ending inventory is

= 15 units × $70 + 15 units × $65

= $1,050 + $975

= $2,025