Question

Transactions for the month of July were:

                                   Purchases                                                    Sales              

July 1 (balance) 3,200 @ $3.20 July 2 2,400 @ $5.50

3 8,800 @ 3.10                            6    6,400 @ 5.50

7 4,800 @   3.30                            9    4,000 @ 5.50

15 7,200 @   3.40                         10    1,600 @ 6.00

22 2,000 @   3.50                         18    5,600 @   6.00

25       800 @   6.00

Assuming that perpetual inventory records are kept in dollars, the ending inventory on a FIFO basis is

Answer 1

Answer : Calculation Of ending Inventory on a FIFO basis : $ 25400

Explanation :

Total sales = 2400 + 6400 +4000 + 1600 +5600 = 20000

Total purchases ( including opening ) = 3200 + 8800 + 4800 +7200 +2000 +800 = 26800

Ending inventory = 26800 - 20000 = 6800

Cost of ending inventory = ( 800 * 6 ) + ( 2000 *3.5 ) + ( 4000 * 3.4 ) = $ 25400

Proper explanation is given below in the table :

Date	Purchases		Cost of goods sold			Ending Inventory
	Units	Rate	Units	Rate	Amount($)	Units	Rate	Amount($)
Jul-01	3200	3.2				3200	3.2	10240
Jul-02			2400	3.2	7680	800	3.2	2560
Jul-03	8800	3.1				800	3.2	2560
						8800	3.1	27280
Jul-06			800	3.2	2560
			5600	3.1	17360	3200	3.1	9920
Jul-07	4800	3.3				3200	3.1	9920
						4800	3.3	15840
Jul-09			3200	3.1	9920
			800	3.3	2640	4000	3.3	13200
Jul-10			1600	3.3	5280	2400	3.3	7920
Jul-15	7200	3.4				2400	3.3	7920
						7200	3.4	24480
Jul-18			2400	3.3	7920
			3200	3.4	10880	4000	3.4	13600
Jul-22	2000	3.5				4000	3.4	13600
						2000	3.5	7000
Jul-25	800	6				4000	3.4	13600
						2000	3.5	7000
						800	6	4800
								25400