Assuming that a periodic inventory system is used, what is the amount allocated to ending inventory on a FIFO basis?

Question

Quizplus · Accepted Answer

To calculate ending inventory using FIFO method, we first assume that the units sold came from the oldest units in beginning inventory and any purchases made before the sale. This means the remaining units in inventory must have come from the most recent purchase. 
Calculations: 
- 2,000 units were purchased on June 12th for $25 per unit, totaling $50,000. 
- 1,000 units were purchased on July 16th for $26 per unit, totaling $26,000. 
- 3,000 units were sold throughout the period, leaving 1,000 units in ending inventory. 
Using FIFO, we allocate the most recent purchase of 1,000 units to ending inventory. 
Cost of 1,000 units from July 16th purchase: 1,000 x $26 = $26,000 
Therefore, the amount allocated to ending inventory on a FIFO basis is $26,000. 
Answer B is the correct choice as it matches the calculated amount.

Assuming That a Periodic Inventory System Is Used, What Is