The following information was available from the inventory records of Queen Company for July: What should be the inventory reported on Queen's July 31 statement of financial position using the FIFO inventory method?
A) £54,000.
B) £58,800.
C) £62,400.
D) £63,000.

Question

The following information was available from the inventory records of Queen Company for July:  What should be the inventory reported on Queen's July 31 statement of financial position using the FIFO inventory method?
A) £54,000. 
B) £58,800. 
C) £62,400. 
D) £63,000.

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first items purchased are the first items sold. Therefore, the cost of goods sold will be calculated as follows:
- (100 units @ £400) + (200 units @ £420) + (50 units @ £430) = £106,500

To calculate the value of the ending inventory, we start with the most recent units purchased and work backwards:
- 25 units @ £430 = £10,750
- 50 units @ £420 = £21,000
- 125 units @ £400 = £50,000
- Total ending inventory value = £81,750

Therefore, the inventory reported on Queen's July 31 statement of financial position using the FIFO method is £62,400 (£106,500 - £81,750).

The Following Information Was Available from the Inventory Records of Queen