Vibe Pty Ltd uses the periodic inventory method and had the following inventory information available for 2020: Units Unit cost Total cost 1/1 Beginning inventory 15 $4.00 $ 60 20/1 Purchase 60 $4.40 264 25/7 Purchase 30 $4.20 126 20/10 Purchase 45 $4.80 216 150 $666 A physical count of inventory on 31 December revealed that there were 50 units on hand. Answer the following independent questions and show computations supporting your answers. 3-(A) Calculate the value of the ending inventory at 31 December assuming that the company uses the FIFO method.
Question
Vibe Pty Ltd uses the periodic inventory method and had the following inventory information available for 2020:
Units Unit cost Total cost
1/1 Beginning inventory 15 60
20/1 Purchase 60 $4.40 264
25/7 Purchase 30 $4.20 126
20/10 Purchase 45 $4.80 216
150 $666
A physical count of inventory on 31 December revealed that there were 50 units on hand.
Answer the following independent questions and show computations supporting your answers.
3-(A) Calculate the value of the ending inventory at 31 December assuming that the company uses the FIFO method.
Solution
The FIFO (First-In, First-Out) method assumes that the oldest inventory items are sold first.
Here's how to calculate the value of the ending inventory at 31 December using the FIFO method:
Step 1: Determine the number of units sold Total units purchased and beginning inventory: 15 (beginning) + 60 (20/1 purchase) + 30 (25/7 purchase) + 45 (20/10 purchase) = 150 units Units on hand at 31 December: 50 units Units sold = Total units - Units on hand = 150 units - 50 units = 100 units
Step 2: Calculate the cost of goods sold (COGS) The first 100 units sold would be the 15 units from beginning inventory and 85 units from the purchases (60 units from 20/1 purchase and 25 units from 25/7 purchase).
COGS = (15 units * 4.40) + (25 units * 60 + 105 = $429
Step 3: Calculate the value of the ending inventory The remaining 50 units would be from the last purchase (20/10 purchase).
Ending inventory = 50 units * 240
So, the value of the ending inventory at 31 December using the FIFO method is $240.
Similar Questions
A company's inventory records report the following: Date Activities Units Acquired at Cost Units Sold at RetailAugust 1 Beginning inventory 15 units @ $38 = $570 August 5 Purchase 10 units @ $39 = $390 August 12 Purchase 20 units @ $40 = $800 August 15 Sales 30 units soldUsing the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?Multiple Choice$400$290$600$1,160$1,760
Assuming the periodic inventory method is used by Selena Pty Ltd for the current period, the following data were taken from the ledger:Purchases$60,000Purchases Returns and Allowances$900Freight-in$300Additional information: the firm was given a trade discount of $700 when purchasing inventory.Beginning inventory was $12,000 and ending inventory was $16,000. What was cost of sales? $59,100. $47,300. $54,700. Correct! $55,400.
A company just starting business made the following four inventory purchases in June: June 1 150 Units $780 June 10 200 units $1 170 June 15 200 units $1 260 June 28 150 units $990 TOTAL $4 200 A physical count of inventory on June 30 reveals that there are 250 units on hand. Using the LIFO inventory method, the value of the ending inventory on June 30 is: Group of answer choices $2 835. $1,620. $2,580. $1,365.
Assume that Widgets, Inc. uses a periodic specific identification inventory system. During the period, it sold 4 units from beginning inventory, 8 units from the Jan. 5 purchase, and 2 units from the Jan. 29 purchase. Calculate the dollar value of its cost of goods sold for the period based on the information provided below. DateActivity Jan 1Beginning Inventory10 @ $12Jan 5Purchase10 @ $15Jan 29Purchase10 @ $18Jan 30Sale14 unitsMultiple choice question.$140$210$204$246
Use the following inventory information for the month of July to answer the below question. July 1 Beginning inventory 20 units at $19 $380 July 7 Purchases 70 units at $20 $1 400 July 22 Purchases 10 units at $22 $220 $2 000 A physical count of inventory on July 30 reveals that there are 35 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is: Group of answer choices $680. $720. $1 280. $1 320.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.