Question

ABC Company employs a periodic inventory system and sells
its inventory to customers for $29 per unit. ABC Company
had the following inventory information available for
the month of May:

May 1    Beginning inventory 2,400 units @ $14 cost per unit
May 8    Sold 1,100 units
May 13   Purchased 1,400 units @ $11 cost per unit
May 18   Sold 1,200 units
May 21   Purchased 800 units @ $19 cost per unit
May 28   Sold 500 units
May 30   Purchased 1,700 units @ $10 cost per unit

During May, ABC Company had operating expenses of $15,400 and
had an income tax rate of 43%.

Calculate the dollar amount of ending inventory shown on ABC's
May 31 balance sheet using the FIFO method.

Answer 1

Calculation of cost of goods available for sale

	A	B	A x B
Date	Units	Unit Cost	Total Cost
May-01	2,400	$14	$33,600
May-13	1,400	$11	$15,400
May-21	800	$19	$15,200
May-30	1,700	$10	$17,000
	6,300		$81,200

Number of units available for sale = 6,300

Number of units sold =2,800

ending inventory =  Number of units available for sale- Number of units sold

= 6,300-2,800

= 3,500 units

As per FIFO method, cost of goods sold will be calculated as under:

	A	B	A x B
Date	Units	Unit Cost	Total Cost
May-01	2,400	$14	$33,600
May-13	400	$11	$4,400
	2,800		$38,000

Cost of goods sold = $38,000

Cost of ending inventory = cost of goods available for sale - cost of goods sold

= 81,200-38,000

= $43,200

The dollar amount of ending inventory shown on ABC's May 31 balance sheet using the FIFO method = $43,200

Kindly comment if you need further assistance.

Thanks‼!