Indigo Ltd uses the FIFO assumption with the periodic inventory method.
Units Unit Total
Cost cost
Beginning inventory 12 $10 $120
Purchase 10 $12 $120
Purchase 6 $11 $66
Sales during year were 16 units. What was the value assigned to the closing stock of this item at the end of the period?

Question

Quizplus · Accepted Answer

Using the FIFO assumption, the cost of the units sold would be $10 for the first 12 units and $12 for the next 4 units. This gives a total cost of $88. The remaining inventory would be the 6 units from the second purchase at a cost of $11 per unit, giving a total of $66. So the value assigned to the closing stock is $66.

Indigo Ltd Uses the FIFO Assumption with the Periodic Inventory