Question

Nov 1 Inventory 60 units @ $7.00
Nov 8 Purchase 90 units @ $6.00
Nov 17 Purchase 70 units @ $7.00
Nov 25 Purchase 110 units @ $8.00
A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand. Assume a periodic inventory system is used. Ending inventory under FIFO is

Answer 1

To calculate the ending inventory under the FIFO (First-In, First-Out) method in a periodic inventory system, we need to allocate the costs of the units that remain in inventory based on the assumption that the oldest inventory items are sold first.

Let's summarize the inventory transactions:

1. **November 1:** Beginning Inventory: 60 units @ $7.00
2. **November 8:** Purchase: 90 units @ $6.00
3. **November 17:** Purchase: 70 units @ $7.00
4. **November 25:** Purchase: 110 units @ $8.00

### Step 1: Calculate total units available for sale
- Units from November 1: 60
- Units from November 8: 90
- Units from November 17: 70
- Units from November 25: 110

**Total Units Available for Sale = 60 + 90 + 70 + 110 = 330 units**

### Step 2: Determine the units sold
- **Ending Inventory:** 100 units on hand
- **Units Sold = Total Units Available - Ending Inventory = 330 - 100 = 230 units sold**

### Step 3: Calculate Ending Inventory using FIFO
Under FIFO, the most recent purchases remain in inventory. Therefore, we will take the latest purchases first until we have accounted for the 100 remaining units.

- We will start from the most recent purchase:
- **November 25:** 110 units @ $8.00
- We can take 100 units from this batch.

Thus, the ending inventory is:

- 100 units from the November 25 purchase @ $8.00

### Step 4: Calculate the total cost of ending inventory
\[
\text{Ending Inventory} = 100 \text{ units} \times \$8.00 = \$800.00
\]

Therefore, the ending inventory under FIFO is **$800.00**.