Question

Cost of Materials Issuances Under the FIFO Method

An incomplete subsidiary ledger of materials inventory for May is as follows:

a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO.

Received				Issued				Balance
Receiving Report Number	Quantity	Unit Price		Materials Requisition Number	Quantity	Amount		Date	Quantity	Unit price	Amount
								May 1	280	$9	$2,520
22	200	$11						May 4
				104	320	$		May 10
28	130	13						May 21
				117	190			May 27

b. Determine the materials inventory balance at the end of May.
$

c. Journalize the summary entry to transfer materials to work in process. If an amount box does not require an entry, leave it blank.

d. Comparing   as reported in the materials ledger with predetermined order points would enable management to order materials before a(n)   causes idle time.

Answer 1

a,

	FIFO	Received			Issued			Balance
Date	Activity	Units	Unit Price	Amount	Units	Unit Price	Amount	Units	Unit Price	Amount
May-01	Beginning Inventory							280	$      9.00	$    2,520
May-04	Purchase	200	$        11.00	$        2,200				280	$      9.00	$    2,520
								200	$   11.00	$    2,200
May-10	Sales				280	$      9.00	$    2,520
					40	$   11.00	$       440	160	$   11.00	$    1,760
May-21	Purchase	130	$        13.00	$        1,690				160	$   11.00	$    1,760
								130	$   13.00	$    1,690
May-27	Sales				160	$   11.00	$    1,760
					30	$   13.00	$       390	100	$   13.00	$    1,300
	Total	330		$        3,890	510		$   5,110	100		$   1,300

b. Material Inventory Balance = $1300

c.

Account Titles	Debit	Credit
Work in Process Inventory	$        5,110
Raw Material Inventory		$        5,110

d.

Comparing inventory balance as reported in the materials ledger with predetermined order points would enable management to order materials before a(n) stock out causes idle time.