The following lots of a particular commodity were available for sale during the year: The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year, according to the first-in, first-out method?
A) $1 200
B) $1 230
C) $1 370
D) $1 400

Question

The following lots of a particular commodity were available for sale during the year:  The firm uses the periodic system and there are 20 units of the commodity on hand at the end of the year. What is the amount of inventory at the end of the year, according to the first-in, first-out method?
A) $1 200 
B) $1 230 
C) $1 370 
D) $1 400

Quizplus · Accepted Answer

To determine the amount of inventory at the end of the year using the first-in, first-out (FIFO) method, we assume that the first goods purchased are the first goods sold. Therefore, the cost of the 60 units purchased on Jan 15 ($8 per unit) and the 70 units purchased on March 26 ($10 per unit) are added together to get a total cost of $1,160. The cost of the 20 units on hand at the end of the year is then added to get a total inventory value of $1,370 (11eb8637_e8f7_0d07_b8d2_31e2e6af270d_TB8763_00).

The Following Lots of a Particular Commodity Were Available for Sale