FIFO Method Question

by Ritu Mehan
(Ludhiana, Punjab, India)

Date Particulars Units Rate

01.03.09 opening stock 100 $1.75
05.03.09 purchased 150 $1.50
12.03.09 purchased 300 $1.60
08.03.09 issued 200 $ -
18.03.09 issued 250 $ -

Assuming this business used the FIFO method, what would the rates be for the above issues of inventory?

Comments for FIFO Method Question

Click here to add your own comments

Question Re: Closing Inventory
by: Alex

Can anyone please help me with this one?!

V Ltd's records at year end showed that there were 60 units on hand at cost of $50 each. A stock count at year end found there were only 52 units of inventory on hand. V Ltd had sold 100 units of inventory in the last month of the year realising a net price of $45 after selling costs. Which of the following statements is true?

Select one:
a. Sales in the last month of the year $4 500
b. Loss of inventory $660
c. Inventory on hand at year end $2 600
d. Inventory on hand at year end $2 340

Hi Alex, the answer is c. $2,600. This is calculated as 52 units x $50 cost = $2,600. The actual inventory on hand is 52 units so this is the figure we use.

Btw the sales is not $4,500 - "sales" is a gross figure without any selling costs but what they give us - the net price of $45 - is after selling costs have been deducted.

Best,
Michael Celender

not clear
by: Anonymous

why was 200 used and not 250?

answer
by: Anonymous

stock ledger
1.03.09 [100 1.75 175]
5.03.09 150 1.5 225 [100 1.75 175
150 1.5 225]
8.03.09 100 1.75 175 [---
50 1.5 75]
100 1.5 150
12.3.09 300 1.6 480 --- [ 50 1.5 75
300 1.6 480]
18.03.09 50 1.5 75
200 1.6 320 [100 1.6 160]
thus ans. is on 8th $325 and on 18th is $395. that should simplify your matters.

giving answer
by: Anonymous

How did you get the final answers?

ans
by: Anonymous

i) for 200 issued, price is $325
ii) for 250 issued, price is $395

Click here to add your own comments

Return to Ask a Question About This Lesson!.






Enjoying this Website?
Help Support it with a Donation

OR...





Advertise on Accounting-Basics-for-Students.com

Search this website:




All the lessons on this site and much, much more...

Accounting Basics: Complete Guide

Available Now On


Get Your Degree!

Find schools and get information on the program that’s right for you.

Powered by


Subscribe to
The Student Accountant newsletter

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you The Student Accountant.