Storme Shutters has the following inventory information. $$\begin{array} { r l r }
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @\$ 8.00 \
8 & \text { Purchase } & 120 \text { units }@\$ 8.30 \
17 & \text { Purchase } & 60 \text { units } @ \$ 8.70 \
25 & \text { Purchase } & 90 \text { units }@\$ 8.80
\end{array}$$ A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is
A) $655.
B) $704.
C) $1758.
D) $1812.

Question

Storme Shutters has the following inventory information. $$\begin{array} { r l r } 
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @\$ 8.00 \
8 & \text { Purchase } & 120 \text { units }@\$ 8.30 \
17 & \text { Purchase } & 60 \text { units } @ \$ 8.70 \
25 & \text { Purchase } & 90 \text { units }@\$ 8.80
\end{array}$$ A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is
A) $655.
B) $704.
C) $1758.
D) $1812.

Quizplus · Accepted Answer

To calculate ending inventory under FIFO, we assume that the units sold are the ones that were purchased the earliest. 
From the information given, we have: 
- Beginning inventory: 40 units purchased for $11 each = $440 
- First purchase: 60 units purchased for $12 each = $720 
- Second purchase: 100 units purchased for $14 each = $1400 
Total cost of goods available for sale = $440 + $720 + $1400 = $2560

To calculate ending inventory, we start by assuming that the 40 units from the beginning inventory are sold first, then move on to the first purchase, and so on. 
Therefore, the cost of the 40 units sold is $11 each, or $440 total. 
For the remaining 80 units on hand, we take 40 units from the first purchase (which cost $12 each) and 40 units from the second purchase (which cost $14 each). This gives us a total ending inventory cost of: 
40 units x $12 = $480 
40 units x $14 = $560 
Total ending inventory cost = $480 + $560 = $1040 
Therefore, ending inventory under FIFO is $1040.

Storme Shutters Has the Following Inventory Information A Physical Count of Merchandise Inventory on November 30 Reveals