On July 1, Deuce Hardware, Inc.had an inventory of 300 gas grills costing $100 each.Purchases and sales during July are as follows: $\begin{array}{lll}
\text {Date}&\text {Purchases}&\text {Sales}\
\text { July 3 } & & 100 @ \$ 125 \text { each } \
\text { July } 10 & 150 @ \$ 110 \text { each } \
\text { July } 17 & &150 @ \$ 130 \text { each }\
\text { July } 17 & 50 @ \$ 120 \text { each } &
\end{array}$ What is the cost of Deuce's inventory on July 31 using the FIFO method?
A)$15, 000
B)$16, 000
C)$16, 500
D)$18, 000

Question

On July 1, Deuce Hardware, Inc.had an inventory of 300 gas grills costing $100 each.Purchases and sales during July are as follows: $\begin{array}{lll}
\text {Date}&\text {Purchases}&\text {Sales}\
\text { July 3 } & & 100 @ \$ 125 \text { each } \
\text { July } 10 &  150 @ \$ 110 \text { each } \
\text { July } 17 & &150 @ \$ 130 \text { each }\
\text { July } 17 & 50 @ \$ 120 \text { each } &
\end{array}$ What is the cost of Deuce's inventory on July 31 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 items purchased are the first items sold. Therefore, the cost of 200 units sold in July would be $100 per unit, since that was the cost of the initial inventory. We are left with 100 units, 50 of which were purchased on July 15 for $110 each, and 50 purchased on July 30 for $120 each.

To determine the cost of the remaining inventory, we must first sell the 50 units which were purchased on July 15. The cost of these units would be $110 each, as they were the most recent purchase. This brings our total cost for the month to $15,000 (300 x $100 initial inventory + 200 x $100 sold + 50 x $110 remaining inventory).

We are then left with 50 units purchased on July 30, which have a cost of $120 each. Therefore, the cost of Deuce's inventory on July 31 using the FIFO method is $16,500 (50 x $120 remaining inventory).

On July 1, Deuce Hardware, Inc What Is the Cost of Deuce's Inventory on July 31