The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year.What is the amount of inventory at the end of the year,according to the first-in,first-out method?

Question

The following lots of a particular commodity were available for sale during the year:  The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year.What is the amount of inventory at the end of the year,according to the first-in,first-out method?

Quizplus · Accepted Answer

Using the FIFO method, we assume that the units sold are from the oldest inventory available. Therefore, we start with the beginning inventory of 120 units and subtract the units sold during the year (840 - 760 = 80 units).

Next, we add the units purchased during the year to the remaining inventory (80 + 310 + 120 + 540 = 1050 units).

Finally, we subtract the remaining units on hand at the end of the year (1050 - 20 = 1030 units) and multiply by the unit cost ($1.33) to get the total inventory value ($1373.90).

Rounding it off to the nearest dollar gives us a final answer of $1370, which is option C.

The Following Lots of a Particular Commodity Were Available for Sale