Question

# Swifty uses the periodic inventory system. For the current month, the beginning inventory consisted of 7000...

Swifty uses the periodic inventory system. For the current month, the beginning inventory consisted of 7000 units that cost \$9.00 each. During the month, the company made two purchases: 2800 units at \$10.00 each and 11900 units at \$10.50 each. Swifty also sold 12700 units during the month. Using the FIFO method, what is the ending inventory?

\$94500.

\$81000.

\$83000.

\$89553.

Given,

Beginning inventory = 7000 units @\$9.00 each

Purchase 1 = 2800 units @\$10 each

Purchase 2 = 11900 units @10.50 each

Sale = 12700 units

Solution :-

Ending units = beginning inventory + purchase 1 + purchase 2 - sale

= 7000 + 2800 + 11900 - 12700 = 9000 units

Using FIFO method, these 9000 units belongs to purchase 2 units, so, cost of each unit should be taken from purchase 2.

Now,

Ending inventory = ending units x cost of each units of purchase 2

= 9000 units x \$10.50 = \$94500