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?

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Answer
by: Anonymous

Opening Stock 100 @ 1.75 = $175
5 March Purchases 150 @ 1.50 = $225
(175 + 225) $400

8 March Issued 200
- 100 @ 1.75 = $175
- 100 @ 1.50 = $150
Total $325-------($325)
(400 - 325) $75

12 March Purchase 300 @ 1.60 = $480
(75 +480) $555

18 March Issued 250
- 50 @ 1.50 = $75
- 200 @ 1.60 = $320
Total $395-------($395)
Closing Inventory (555 - 395) $160

I was not able to put underlines/totals. i hope it is not to confusing.

FIFO
by: Anonymous

Add more questions for FIFO method.

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.