Checkers uses the periodic inventory system. For the current month, the beginning inventory consisted of 4,800 units that cost $12 each. During the month, the company made two purchases: 2,000 units at $13 each and 8,000 units at $13.50 each. Checkers also sold 8,600 units during the month. Using the FIFO method, what is the ending inventory?
A) $80,292.
B) $74,400.
C) $83,700.
D) $75,800.

Question

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first units purchased are the first units sold, and the ending inventory consists of the most recently purchased units.

1. Beginning Inventory Cost: 4,800 x $12 = $57,600
2. First Purchase Cost: 2,000 x $13 = $26,000
3. Second Purchase Cost: 8,000 x $13.50 = $108,000
4. Total Cost of Units Available for Sale: $57,600 + $26,000 + $108,000 = $191,600
5. Cost of Goods Sold: 8,600 x $12 = $103,200
6. Ending Inventory: $191,600 - $103,200 = $88,400

Therefore, the ending inventory using the FIFO method is $83,700 (the cost of the most recently purchased 6,200 units: 6,200 x $13.50).

Checkers Uses the Periodic Inventory System