A company values its inventory using the first in, first out (FIFO) method. At 1 May 20X5 the company had 1,200 engines in inventory, valued at $280 each.
During the year ended 30 April 20X6 the following transactions took place:
20X5
10 July : Purchased 180 engines at $230 each
12 November : Sold 500 engines for $320,000
20X6
13 February : Purchased 220 engines at $300 each
14 April : Sold 650 engines for $250,000
What is the value of the company’s closing inventory of engines at 30 April 20X6?
Answer
Total purchase and beginning inventory in unit
= 1,200 +180+ 220 =1,600 units
Total sale in unit =500 + 650 = 1,150 units
Closing inventory in unit = 1,600-1,150= 450 units
Closing inventory in US$ = ?
$
50 @ $280 : 14,000
180 @ $230: 41,400
220 @ $300 : 66,000
Total…………121,400