Question

A physical count of merchandise inventory on July 30 reveals that there are 180 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is

Answer 1

Answer: $3,708

Explanation:

Using FIFO means that the earlier goods are sold before the later ones so the closing inventory would have the latest goods purchased.

If there are 180 units on hand, the cost would be:

• 54 units purchased at $22
• (180 - 54) units purchased at $20

Closing inventory is:

= (54 * 22) + ( (180 - 54) * 20)

= (54 * 22) + ( 126 * 20)

= $3,708