Question

The following inventory was available for sale during the year for Thomasina Tools:

Beginning inventory 10 units at $80

First purchase 15 units at $110

Second purchase 30 units at $140

Third purchase 20 units at $130


Thomasina Tools has 25 units on hand at the end of the year.

What is the dollar amount of inventory at the end of the year according to the first-in, first-out method?

Select one:

A. $5,950

B. $3,300

C. $3,150

D. $3,900

Answer 1

B. $3,300

Step-by-step explanation:

The computation of the ending inventory using the FIFO method is shown below:

Since there are 25 units in hand at the end of the year

Out of which 20 units are taken from third purchased at $130 and the rest 5 units are considered for $140

So,

= 20 units × $130 + 5 units × $140

= $2,600 + $700

= $3,300

Hence, the second option is correct