Alphabet Company, which uses the periodic inventory method, purchases different letters for resale.Alphabet had no beginning inventory.It purchased A thru G in January at $4 per letter.In February, it purchased H thru L at $6 per letter.It purchased M thru R in March at $7 per letter.It sold A, D, E, H, J and N in October.There were no additional purchases or sales during the remainder of the year.
-Use the information above to answer the following question.If Alphabet Company uses the FIFO method,what is the cost of its ending inventory?
A) $24
B) $42
C) $58
D) $76

Question

Quizplus · Accepted Answer

Under FIFO, the earliest purchased items are sold first. The ending inventory consists of the most recently purchased items. The letters remaining are B, C, F, G, I, K, L, M, O, P, Q, R. The cost is (4 letters at $4) + (3 letters at $6) + (5 letters at $7) = $76.

Alphabet Company, Which Uses the Periodic Inventory Method, Purchases Different