The Divine Merchandising Corporation began March operations with merchandise inv

Question

The Divine Merchandising Corporation began March operations with merchandise inventory of 6 units, each of which cost $27. During March, Divine Merchandising made the following purchases: (1) March 4, 12 units @ $28 per unit, (2) March 15, 18 units @ $30 per unit, (3) March 26, 14 units @ $32 per unit. During March the Divine Merchandising Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, and March 28, 12 units. Operating expenses in March were $640. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the FIFO inventory method, determine the inventory dollar amount on March 31.

$284

$280

$320

$480

$270

a.

$284

b.

$280

c.

$320

d.

$480

e.

$270

Explanation / Answer

final

6

12

27

28

162

336

7

18

28

30

196

540

8

14

30

32

240

448

Hence, the remaining inventory value is 320 and is left with 10 units cost $32.

By FIFO method.

Date Purchase Issues Inventory

final

Units Amount Total Units Amount Total Units Amount Total Total Initial 6 27 162 March 4 12 28 336

6

12

27

28

162

336

498 March 6 11 48 528 7 28 196 196 March 15 18 30 540

7

18

28

30

196

540

736 March 20 17 48 816 8 30 240 240 March 26 14 32 448

8

14

30

32

240

448

688 March 28 12 48 576 10 32 320 320

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