Eaton Electronics uses a periodic inventory system.On March 31, Eaton has two plasma TVs on hand at a cost of $1,500 each (serial numbers 11534892 and 11534894).In April, the company purchases four more identical TVs from Toshiba for $1,450 each (serial numbers 11542631 through 11542634).In May, the company purchases five more identical TVs for $1,600 each (serial numbers 11550964 through 11550968).In June, Eaton sells two of these TVs (serial numbers 11534894 and 11542631).There were no additional purchases or sales during the remainder of the year.
-Use the information above to answer the following question.Eaton Electronics uses the FIFO method.What is the cost of its ending inventory?
A) $13,850
B) $13,800
C) $13,760
D) $13,600

Question

Quizplus · Accepted Answer

Using the FIFO method, the cost of the ending inventory is calculated as follows:
- The two TVs from March (serial numbers 11534892 and 11534894) are sold first, leaving four TVs from April and five TVs from May in inventory.
- The cost of the four TVs from April is $5,800 (4 x $1,450).
- The cost of the five TVs from May is $8,000 (5 x $1,600).
- Therefore, the cost of the ending inventory is $13,800 ($5,800 + $8,000).

Eaton Electronics Uses a Periodic Inventory System