Holliday Company's inventory records show the following data: Units Unit Cost Inventory, January...
Question:
Holliday Company's inventory records show the following data:
| Units | Unit Cost | |
| Inventory, January 1 | 5,000 | $9.00 |
| Purchases: | ||
| June 18 | 4,500 | 8.00 |
| November 8 | 3,000 | 7.00 |
A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method.
Under the FIFO method, the December 31 inventory is valued at:
a. $14,000
b. $15,000
c. $18,000
d. $14,500
Inventory Valuation:
In financial accounting, inventory valuation plays a significant role in valuing inventory. Accordingly, in practice, we use four methods of inventory valuation naming as the specific identifications, FIFO, LIFO, and weighted average method.
Answer and Explanation: 1
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View this answerThe correct answer is option a. $14,000.
Based on the information above, the total remaining inventory on hand is 2,000 units. Take note that if...
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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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