A company has inventory of 15 units at a cost of $12 each on August 1. On August 5, they
purchased 10 units at $13 per unit. On August 12, they purchased 20 units at $14 per unit. On
August 15, they sold 30 units. Using the FIFO perpetual inventory method, what is the value of
the inventory on August 15 after the sale?
a.
$140
b $160
c. $210
d. $380
e. $590
Solution
Using the FIFO perpetual inventory method, what is the value of the ending inventory on
August 15 after the sale?
August 1, 15 units at a cost of $12 each
August 5, purchased 10 units at $13
August 12, purchased 20 units at $14
August 15, sold 30 units
Ending inventory 15 units
Under FIFO, the oldest units are assumed to be sold first, so the ending 15 units left unsold
must have come from the newest units, so 15 units x $14 = $210.