XYZ Company employs a FIFO periodic inventory system and had the following inven

Question

XYZ Company employs a FIFO periodic inventory system and had the following inventory information available for the month of July: July 1 Beginning inventory 200 units @ $5.00 cost per unit July 3 Purchased 300 units @ $5.30 cost per unit July 8 Sold 180 units July 13 Purchased 100 units @ $5.80 cost per unit July 18 Sold 120 units July 20 Purchased 400 units @ $6.50 cost per unit July 28 Sold 250 units July 31 Purchased ??? units @ $5.20 cost per unit During July, XYZ Company reported an inventory turnover ratio of 1.20.Calculate the number of units XYZ Company purchased on July 31.

Explanation / Answer

Inventory turnover ratio = cost of good sold or sales/Average inventory or inventory cost of goods sold sale on 8 july = 180@$5.00=900 on 18 july=20@5+100@5.30=630 on 28 july= 200@5.30+50@5.80=1350 COST OF GOODS SOLD 2880 1.20 =2880/ AVG INVENTORY AVG INVENTORY =2400 OPENING +CLOSING/2=2400 1000+X=2400*2 X= 3800 X= 50UNIT@5.80+400*6.50+ PURCHSE UNIT ON31ST JULY@5.20 3800=2890+UNIT ON 31ST@5.20 UNIT PUR ON 31ST = 910/5.20=175 UNITS

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