A company: purchased 100 units for $20 each on January 31, purchased 100 units for $30 on February 28, and sold 150 units for $45 each from March 1 through December 31. If the company uses the First-in, First-out inventory costing method, what is the amount of inventory on the December 31 balance sheet

First-In-First-Out is a method of inventory valuation whereby the stock that comes in first, is used first. This is common for inventory consisting of perishables, such as vegetables where if not used/sold soon, it would be wasted.

Jan 31: Purchases = $20 x 100 units = $2000

Remaining inventory:

$20 x 100 units = $2000

Feb 28: Purchases = $30 x 100 units = $3000

Remaining inventory:

$20 x 100 units = $2000

$30 x 100 units = $3000

Sales = 150 units x $45:

$20 x 100 units = $2000

$30 x 50 units = $1500

Remaining inventory

200 - 150 = 50 units x $30 = $1500

Thus,

Cost of Goods Sold = $3500 ($2000 + $1500)

Ending inventory as at 31 December = $1500

andromache andromache · Answer 2 · 2021-12-14T09:55:50+01:00

andromache andromache

14-12-2021

The amount of the closing inventory under FIFO method is $1,500.

The calculation is as follows:

[tex]= (150 - 100) \times \$30\\\\= 50 \times \$30[/tex]

= $1,500

Therefore we can conclude that The amount of the closing inventory under FIFO method is $1,500.

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