Grape Gratuities Company has the following inventory data: $$\begin{array} { r l r r }
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & 440\&&&\$4,180
\end{array}$$ A physical count of merchandise inventory on July 31 reveals that there are 50 units on hand.Using the FIFO inventory method the amount allocated to ending inventory for July is
A)$1170.
B)$1010.
C)$1070.
D)$1100.

Question

Grape Gratuities Company has the following inventory data: $$\begin{array} { r l r r } 
\text { July } 1 & \text { Beginning inventory } & 40 \text { units at } \$ 20 & \$ 800 \
7 & \text { Purchases } & 140 \text { units at } \$ 21 & 2,940 \
22 & \text { Purchases } & 20 \text { units at } \$ 22 & 440\&&&\$4,180
\end{array}$$ A physical count of merchandise inventory on July 31 reveals that there are 50 units on hand.Using the FIFO inventory method the amount allocated to ending inventory for July is
A)$1170.
B)$1010.
C)$1070.
D)$1100.

Quizplus · Accepted Answer

Under the FIFO method, the ending inventory is valued using the most recent purchases. There are 50 units on hand, so 20 units are from the July 22 purchase at $22 each, and 30 units are from the July 7 purchase at $21 each. The calculation is (20 units x $22) + (30 units x $21) = $440 + $630 = $1070.

Grape Gratuities Company Has the Following Inventory Data A Physical Count of Merchandise Inventory on July 31 Reveals