Bailey Company uses a periodic inventory system and its inventory records contain the following information:

The company sold 1,000 units during June.There were no additional purchases or sales during the remainder of the year.The company had 500 units were in its ending inventory at the end of the year.
-Use the information above to answer the following question.If Bailey Company uses the FIFO costing method,what is the cost of its ending inventory?
A) $1,494
B) $2,290
C) $2,580
D) $2,706

Question

Bailey Company uses a periodic inventory system and its inventory records contain the following information:
  
The company sold 1,000 units during June.There were no additional purchases or sales during the remainder of the year.The company had 500 units were in its ending inventory at the end of the year.
-Use the information above to answer the following question.If Bailey Company uses the FIFO costing method,what is the cost of its ending inventory?
A) $1,494 
B) $2,290 
C) $2,580 
D) $2,706

Quizplus · Accepted Answer

FIFO (first-in, first-out) costing method assumes that the first items purchased are the first items sold. Therefore, the ending inventory consists of the most recently purchased items. In this case, the most recently purchased items are those purchased at a cost of $1,494.

Bailey Company Uses a Periodic Inventory System and Its Inventory