Question 7 ABCCompany employs a periodic inventory system and sells its inventor

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Question 7

ABCCompany employs a periodic inventory system and sells its inventoryto customers for $25 per
unit. ABC Company had the following inventory information availablefor the month of May:

May1    Beginning inventory 5,000 units @ $9 cost perunit

May6    Purchased 4,000 units @ $11 cost per unit

May8    Sold 3,000 units

May13   Purchased 2,000 units @ $5 cost per unit

May18   Sold 2,500 units

May21   Purchased 2,500 units @ $8 cost per unit

May28   Sold 1,800 units

May30   Purchased 2,000 units @ $18 cost per unit

Question 7

Explanation / Answer

remember FIFO is first in first out...so everytime somethingis sold it must be removed from that inventory that was purchasedfirst. : on May 8 we sold 3000 units so those would be removed from the5000 @ $9 : so we now have 2000@ $9 remaining. : on May 18 we sale 2500 more units........so teh 2000 remaining@ $9 are no gone and we also need to remove 500 from 4000purchase at $11.......so that means : 3500 remain in inventory from those purchased @ $11. On May 28we sell another 1800 all of which are removed from the 3500remaining @ $11......so 3500-1800= 1700 . So 1700 remain in inventory @ $11. : so our inventory as of May 31 consists of : 1700 @ $11=18700 2000 @ $5 =10000 2500 @ $8 =20000 2000 @ $18=36000 :
total inventory value is  $84700

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