Question

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic...

Salmone Company reported the following purchases and sales of its only product. Salmone uses a periodic inventory system. Determine the cost assigned to the ending inventory using FIFO.

Date Activities Units Acquired at Cost Units Sold at Retail
May 1 Beginning Inventory 260 units @ $11
5 Purchase 275 units @ $13
10 Sales 195 units @ $21
15 Purchase 155 units @ $14
24 Sales 145 units @ $22

  • $4,565

  • $4,705

  • $3,900

  • $4,040

  • $8,605

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Answer #1

Answer:

As per FIFO method , the items which are first purchased will be sold off first.

Total Sale units = 195 units + 145 units = 340 units

Accordingly out of 340 units sold

● 260 units will be from beginning inventory

● Remaining 80 units will be from may 5 purchase

Therefore ending inventory will be..

◆ 195 units will be from May 5 purchase (275 - 80)

◆ 155 units will be from May 15 purchase

Computation of cost assigned to the ending inventory

195 units from May 5 purchase(195units*$13) $2535
155 units from May15 purchase (155 * $14) $2170
Cost assigned to the ending inventory $4705
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