Question

XYZ Bookstore had 500 units on hand at January 1, costing $9 each. Purchases and sales during the month of January were as follows:

Date:		Purchases:	Sales:
January 1	Beginning balance, 500 units @$9 each
January 14			380 @ $15 each
January 17		250 @ $10 each
January 25		250 @ $12 each
January 29			260 @ $17 each
January 31	Ending balance, 360 units

                                                                                         

XYZ does not maintain perpetual inventory records. According to a physical count, 360 units were on hand at January 31.

The cost of the inventory at January 31, under the FIFO method is:

Group of answer choices

$3,650

$3,820

$4,100.

$3,240

Answer 1

Answer- c. $4100

Reason- As XYZ bookstore uses FIFO method, all sales made will be considered made from first in stocks and thus while calculating value of closing stock price of latest received stock will be considered. Therefore cost of closing stock will be,

a. 250 units @ 12/unit = $3000

b, 110 units @10/ unit= $1100

Total (for 360 units) =$3000+$1100=$4100 (ANS)

Similarly value of goods sold will be,

a. 500 units @ 9/unit = $4500

b. 140 units @ 10/unit= $1400

Total for 640 units= $5900