Question Help1 Leading Edge Frame Shop wants to know the effect of different inv

Question

Question Help1 Leading Edge Frame Shop wants to know the effect of different inventory costing methods on its financial statements. Inventory and purchases data for June are: Click the icon to view the inventory and purchases data.) If Leading Edge Frame Shop uses the FIFO method, the cost of the ending inventory will be OA. $32,400 OB. $27,450. OC, $32,700. OD. $38,250. Data Table 1 Beginning inventory 4 Purchase 9 Sale Units Unit Cost Total Cost 2,400 18.00 $43,200 1,500 $ 18.30 (1,800) Jun 27,450 Print Done

Explanation / Answer

IF LEADING EDGE FRAME SHOP USES FIFO METHOD ,THE COST OF ENDING INVENTORY WILL BE

SALES = 1800 UNITS

SINCE THE ENTITY IS USING FIFO METHOD, SALES WILL BE MADE FIRST OUT OF OPENING INVENTORY AND THEN OUT OF PURCHASES MADE

CLOSING INVENTORY = (2400UNITS-1800UNITS)*$18+(1500UNITS)*$18.3

= $10,800 + $27,450

= $38,250 (OPTION D)

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