A company values its inventory using the FIFO method. At 1 May 20X5 the company

Question

A company values its inventory using the FIFO method. At 1 May 20X5 the company had 700 engines in inventory, valued at $190 each. During the year ended 30 April 20X6 the following transactions took place: 20X5 1 July 1 November 20X6 1 February 15 April Purchased 500 engines at $220 each Sold 400 engines for $160,000 Purchased 300 engines at $230 each Sold 250 engines for $125,000 What is the value of the company’s closing inventory of engines at 30 April 20X6? A $188,500 B $195,500 C $166,000 D $106,000

Explanation / Answer

Answer: Option - A - $188,500

units Opening Inventory 700 Add: 20X5 purchase 500 Less: 20X5 Sales 400 Add: 20X6 purchase 300 Less: 20X6 Sales 250 Closing Inventory 850

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