Sales 6) A company had the following purchases and sales during its first year o

Question

Sales 6) A company had the following purchases and sales during its first year of operations: Purchases January: 10 units at $120 |6units February: 20 units at $125 5 units May: 15 units at $130 9units September. 12 units at $135 8units November: 10 units at $140 13 units On December 31, there were 26 units remaining in ending inventory. Using the Periodic FIFO inventory valuation method, what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.) 6). A) $3.270. B) $3.445. C) $3,200. D) $3.540. E) $3,405.

Explanation / Answer

Under FIFO method, goods purchased first are sold first. Cost of the ending inventory comprises 10 units from November purchase,12 units from Septemebr purchase and 4 units from may purchase Cost of ending inventory = (10*140)+(12*135)+(4*130)= 3540 Option D is correct

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