Consider the following facts: - Company A had 500 units of inventory on hand at

Question

Consider the following facts:
- Company A had 500 units of inventory on hand at the beginning of the year.
- The unit cost of the beginning inventory items was $18 each.
- On January 14, it sold 375 units for $28 each.
- On January 17, it purchased 250 units for $20 each.
- On January 25, it purchased 250 units for $22 each.
- On January 29, it sold 260 units for $32 each.
- Company A does not use the perpetual inventory accounting method.
- At the end of January, Company A takes a physical inventory count and discovers that 365 units are on hand.

Company A's cost of inventory at the end of January is $_________ under the FIFO accounting method.

a. $6,570

b. $7,300

c. $8,030

d. $7,800

e. None of these answers are correct.

Explanation / Answer

Answer: d Company A's cost of inventory at the end of January is $ 7800 under the FIFO accounting method.

Date Particulars Units Amount Rate Jan, 1 Beginning Inventory 500 18 9000 Jan, 17 Purchase 250 20 5000 Jan, 25 Purchase 250 22 5500 Opening+ Purchase 1000 19500 Jan, 14 Sales (Out of beginning) -375 18 -6750 Jan, 29 Sales (Out of beginning) 500-375 -125 18 -2250 Sales (Out of Jan 17 Purchase) 260-125 -135 20 -2700 Closing Stock 365 7800

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