Use the following information for questions below
K-tel Industries had the following activity with one of its inventory items during the current period:
$$\begin{array}{l}
\text { }\
\begin{array} { l l l l }
&&\text {units }&\text { unit cost}\
\text { beginning}&\text {inventory }&30&\$8.00\
\text { purchase}&\text {december 5 }&8&10.5\
\text {sale }&\text {december 11 }&(40)\
\text {purchase }&\text {december 17}&60&12.00\
\text {sale }&\text {december 26 }&(70)\
\end{array}
\end{array}$$
-Using a perpetual inventory system and the FIFO cost formula,the ending inventory was valued at
A)$500.
B)$625.
C)$720.
D)$825.

Question

Use the following information for questions below
K-tel Industries had the following activity with one of its inventory items during the current period:
$$\begin{array}{l}
\text { }\
\begin{array} { l l l l } 
&&\text {units }&\text { unit cost}\
\text { beginning}&\text {inventory }&30&\$8.00\
\text { purchase}&\text {december 5 }&8&10.5\
\text {sale }&\text {december 11 }&(40)\
\text {purchase }&\text {december 17}&60&12.00\
\text {sale  }&\text {december 26 }&(70)\
\end{array}
\end{array}$$
-Using a perpetual inventory system and the FIFO cost formula,the ending inventory was valued at
A)$500.
B)$625.
C)$720.
D)$825.

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) method, the earliest goods purchased are the first to be sold. The ending inventory is composed of the most recently purchased items. After the sales on December 11 and December 26, we calculate the ending inventory as follows:1. Sale on December 11 (40 units): All 30 units from the beginning inventory and 10 units from the December 5 purchase are sold, leaving 0 units from the beginning inventory and (8-10) = -2 units from the December 5 purchase at the time of the sale. However, since we cannot have negative inventory, it means all units from the beginning inventory and the December 5 purchase are sold.2. Remaining inventory after December 11 sale: 0 units from beginning, 0 units from December 5 purchase, and all 60 units from December 17 purchase are still in inventory.3. Sale on December 26 (70 units): This sale would deplete the remaining 60 units from the December 17 purchase and 10 units from a hypothetical next purchase if it existed, but since there's no next purchase, we only consider the 60 units sold from the December 17 purchase.4. Ending inventory calculation: After selling 70 units on December 26, we have 0 units left from the December 17 purchase. However, since we sold a total of 110 units (40 + 70) and there were 98 units available (30 beginning + 8 December 5 purchase + 60 December 17 purchase), we end with the last 60 units from the December 17 purchase being part of the ending inventory calculation.Ending inventory: 60 units at $12.00 each = $720.Therefore, the ending inventory valued under the FIFO method is $720.

Use the Following Information for Questions Below K-Tel Industries Had

Use the Following Information for Questions Below
K-Tel Industries Had