Question

A company had inventory on November 1 of 16 units at a cost of $20 each. On November 2, they purchased 21 units at $21 each. On November 6, they purchased 17 units at $23 each. On November 8, 19 units were sold for $32 each. Using the FIFO perpetual inventory method, what was the value of the inventory on November 8 after the sale?

$769

$700

$737

$735

$719

I got 719. is it correct ?

Answer 1

ANSWER:

Total 19 items sold for $32.

total items purchased + inventory = 16 on november 1 + 21 on november 2 + 17 on november 6

when we use fifo method, first 16 in inventory on november 1 will be sold first , followed by 3 units that were bought on november 2.

so there will be (21 - 3) = 18 items in inventory from november 2 and 17 from november 6.

cost of total items left = 18 * 21 + 17 * 23 = 378 + 391 = 769

so the correct answer is option a that is $769.