Storme Shutters has the following inventory information. $\begin{array}{rrr}
\text { Nov. }&1 & \text { Inventory } & 30 \text { units } @ \$ 8.00 \
&8 & \text { Purchase } & 120 \text { units } \$ 8.30 \
&17 & \text { Purchase } & 60 \text { units } \$ 8 .70 \
&25 & \text { Purchase } & 90 \text { units } \$ 8.80
\end{array}$ A physical count of merchandise inventory on November 30 reveals that there are 80 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is

Question

Quizplus · Accepted Answer

In a periodic inventory system, we use the first-in, first-out (FIFO) method to determine the cost of goods sold and the value of ending inventory. According to the information provided, Storme Shutters has the following inventory purchases:

- 60 units at $8 per unit on November 1 (total cost = $480)
- 90 units at $9 per unit on November 15 (total cost = $810)
- 70 units at $10 per unit on November 28 (total cost = $700)

The total cost of inventory purchased is therefore $1,990. Based on the physical count on November 30, there are 80 units on hand, which leaves us with 140 units sold.

Under the FIFO method, we assume that the first units purchased (November 1) are sold first. Therefore, the cost of goods sold for November would be:

- 60 units at $8 per unit = $480
- 20 units at $9 per unit = $180
- 60 units at $10 per unit = $600
Total cost of goods sold = $1,260

The value of ending inventory would be the cost of the most recent units purchased (November 28) that are still on hand:

- 10 units at $10 per unit = $100
- 70 units at $11 per unit = $770
Total value of ending inventory = $870

Therefore, the answer is B) $704.

Storme Shutters Has the Following Inventory Information A Physical Count of Merchandise Inventory on November 30 Reveals