A company has inventory of 17 units at a cost of $11 each on May 1. On May 5, they purchased 11 units at $16 per unit. On May 12, they purchased 18 units at $17 per unit. On May 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at May 15 after the sale

Question

Chanel Rodgers

Business

15 April, 01:13

A company has inventory of 17 units at a cost of $11 each on May 1. On May 5, they purchased 11 units at $16 per unit. On May 12, they purchased 18 units at $17 per unit. On May 15, they sold 30 units. Using the FIFO periodic inventory method, what is the value of the inventory at May 15 after the sale

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Carolina Ritter · Answer 1

Value of ending inventory on May 15 after sale = $272

Explanation:

The periodic nventory methods calculating inventory through a physical count at the end of the period.

Under FIFO method, the inventory that is purchased first is the one that is sold first. Thus, a sale of 30 units on May 15 will be made from:

Cost of sales:

17 units at $ 11 = 187

11 units at $ 16 = 176

Remaining units = 30 - (17+11) = 2

The 2 units will be taken from units purchased on May 12.

The ending inventory, thus, will be 18 - 2 = 16units at $17 per unit

Value of ending inventory on May 15 after sale = 16 * 17 = $272