A physical count of the inventory on August 31 reveals that there are 500 units on hand. Using...
Question:
A company just starting a business made the following purchases in August:
| August 1 | 300 units | $1,560 |
| August 12 | 400 units | $2,340 |
| August 24 | 400 units | $2,520 |
| August 30 | 300 units | $1,980 |
| 1,400 units | $8,400 |
A physical count of the inventory on August 31 reveals that there are 500 units on hand. Using the FIFO inventory method, the value of the ending inventory on August 31 is:
a. $5,670.
b. $3,240.
c. $5,160.
d. $2,730.
Inventory:
At the end of the accounting period, unsold products are considered inventory. Two methods are used to calculate the units of products remaining in inventory: perpetual, which involves recording every transaction electronically and updating the inventory level after each transaction, and periodic, which involves a physical count of units at the end of the accounting period using traditional methods.
Answer and Explanation: 1
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View this answerThe correct answer is b. $3,240.
Let us first calculate the per unit cost of every transaction as shown below:
| Date | Units (A) | Amount... |
|---|
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Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average
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Chapter 6 / Lesson 11
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Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.
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