Homework SourseAAA Co uses a periodic inventory system and has the followin
AAA Co. uses a periodic inventory system and has the following information in regard to its inventory:
There are 650 units in ending inventory. What is the amount of the ending inventory using the FIFO method?
A. $9,000
B. $10,900
C. $11,550
D. $4,500
| Beginning inventory | 300 units @ 15 | $4,500 |
| Purchase on January 25 | 400 units @ 16 | 6,400 |
| Purchase on March 15 | 300 units @ 17 | 5,100 |
| Purchase on October 2 | 500 units @ 18 | 9,000 |
| Goods available for sale | $25,000 |
Solution
Solution: Under FIFO (first-in First-out) method, oldest inventories are sold first and newest purchased inventories remain in the ending inventory.
Accordingly, In the given case,
Ending inventory = 500 x 18 + 150 x 17
= $11,550
Hence, answer is C.$11,550
