Graham Company uses a periodic inventory system.Details for the inventory account for the month of January, 2011 are as follows:
$\begin{array}{llrr}&\text { Units } &\text { Per unit price }&\text { Total }\
\text { Balance, } 1 / 1 / 11 & 300 & \$ 5.00 & \$ 1500 \
\text { Purchase, } 1 / 15 / 11 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 11 & 150 & 5.50 & 825
\end{array}$

An end of the month (1/31/11) inventory showed that 180 units were on hand.If the company uses FIFO, what is the value of the ending inventory?

Question

Graham Company uses a periodic inventory system.Details for the inventory account for the month of January, 2011 are as follows: 
$\begin{array}{llrr}&\text { Units } &\text { Per unit price }&\text { Total }\
\text { Balance, } 1 / 1 / 11 & 300 & \$ 5.00 & \$ 1500 \
\text { Purchase, } 1 / 15 / 11 & 150 & 5.30 & 795 \
\text { Purchase, } 1 / 28 / 11 & 150 & 5.50 & 825
\end{array}$

An end of the month (1/31/11) inventory showed that 180 units were on hand.If the company uses FIFO, what is the value of the ending inventory?

Quizplus · Accepted Answer

Under FIFO, the ending inventory consists of the most recent purchases. The 180 units on hand would be from the 1/28/11 purchase (150 units at $5.50) and 30 units from the 1/15/11 purchase (30 units at $5.30). The calculation is: (150 units x $5.50) + (30 units x $5.30) = $825 + $159 = $984.

Graham Company Uses a Periodic Inventory System An End of the Month (1/31/11) Inventory Showed That 180