Question

Periodic Inventory System.

Using FIFO calculate the inventory balance for the month shown below. Show Your Work & Explain your answer.

	Cost of goods available for sale:
Date		# Units	Cost per unit
1/1	Beginning Inventory	40	$60
1/4	Purchased	30	$50
1/15	Purchased	10	$40
1/25	Purchased	12	$55

Retail SOG:
Date Sold	# of units sold	Price per unit
1/13	25	$65
1/24	45	$85

Answer 1

As we know FIFO method means first in first out ,is an inventory costing method that companies use to track the cost of inventory that is sold by assuming that the first product purchased is the first product sold. Hence the first product in the door is the first product out of the door.

Total no of units sold are 70 units. so it is assumed that these are sold from the inventory dated 1/1 and 1/4 first in first out.so the reminig inventory dated on 1/15 and 1/25 .which are 22 units.

the value of inventory

1/15 purchased 10 units *$40 per unit =$400

1/25 purchased 12 units * $55 per unit =$660

total ending inventory based on fifo method :400+660 = $1040.