On June 1, Dollar Hardware, Inc. had an inventory of 300 gas grills costing $100 each. Purchases and sales during June are as follows:

What is the cost of Dollar's inventory on June 30 using the FIFO method?
A) $15,000
B) $16,000
C) $16,500
D) $18,000

Question

On June 1, Dollar Hardware, Inc. had an inventory of 300 gas grills costing $100 each. Purchases and sales during June are as follows: 
 
What is the cost of Dollar's inventory on June 30 using the FIFO method?
A) $15,000 
B) $16,000 
C) $16,500 
D) $18,000

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first goods purchased (First-In-First-Out) are the first sold. So, the cost of goods sold during June is calculated as:
Cost of Goods Sold = (100 x 150) + (110 x 200) = $23,000

To calculate the cost of inventory on June 30, we subtract the cost of goods sold from the total cost of goods available for sale:
Total cost of goods available for sale = (300 x 100) + (150 x 110) + (50 x 120) = $37,500
Cost of inventory on June 30 = Total cost of goods available for sale - Cost of Goods Sold
Cost of inventory on June 30 = $37,500 - $23,000 = $14,500

Therefore, the cost of Dollar's inventory on June 30 using the FIFO method is $16,500 (not one of the choices listed).