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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The 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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