: A company made the following merchandise purchases and sales during the month
ID: 2416275 • Letter: #
Question
: A company made the following merchandise purchases and sales during the month of May:
May 1 purchased
380
units at
$15 each
May 5 purchased
270
units at
$17 each
May 10 sold
400
units at
$50 each
May 20 purchased
300
units at
$22 each
May 25 sold
400
units at
$50 each
There was no beginning inventory. If the company uses the FIFO periodic inventory method, what would be the cost of the ending inventory?
May 1 purchased
380
units at
$15 each
May 5 purchased
270
units at
$17 each
May 10 sold
400
units at
$50 each
May 20 purchased
300
units at
$22 each
May 25 sold
400
units at
$50 each
Explanation / Answer
Ending inventory = 380+ 270 + 300 - 400 - 400 = 150 units
The first 400 units sold were having a cost of 380 x 15 + 20 x 17
The next 400 units sold were having a cost of 250 x 17 + 150 x 22
The ending inventory consisis of 150 units purchased on May 20.
So, the cost of ending inventory = 150 x $22 each = $3300
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