Henri Company's inventory records show the following data: $\begin{array}{llrr}
&&\text { Units }&\text { Unit Cost }\
\text { Inventory,}&\text { January 1 } & 10,000 & \$ 9.20 \
\text { Purchases: } & \text { June } 18 & 9,000 & 8.00 \
&\text { November 8 } & 6,000 & 7.25
\end{array}$
A physical inventory on December 31 shows 3000 units on hand. Henri sells the units for $12 each. The company has an effective tax rate of 20%. Henri uses the periodic inventory method. Under the FIFO method the December 31 inventory is valued at
A) $21750.
B) $24450.
C) $25800.
D) $27600.

Question

Henri Company's inventory records show the following data: $\begin{array}{llrr}
&&\text { Units }&\text { Unit Cost }\
\text { Inventory,}&\text {  January 1 } & 10,000 & \$ 9.20 \
\text { Purchases: } & \text { June } 18 & 9,000 & 8.00 \
&\text { November 8 } & 6,000 & 7.25
\end{array}$
 A physical inventory on December 31 shows 3000 units on hand. Henri sells the units for $12 each. The company has an effective tax rate of 20%. Henri uses the periodic inventory method. Under the FIFO method the December 31 inventory is valued at
A) $21750.
B) $24450.
C) $25800.
D) $27600.

Quizplus · Accepted Answer

Under FIFO, the ending inventory consists of the most recently purchased units. Therefore, the 3,000 units on hand at December 31 would be valued at the November 8 purchase price of $7.25 per unit, resulting in an inventory value of 3,000 units x $7.25 = $21,750.

Henri Company's Inventory Records Show the Following Data A Physical Inventory on December 31 Shows 3000 Units on Units