what is the dollar value of ending inventory if there were 17,000 units on hand on December 31?
January 1 beginning inventory 5,000 units @$0.89
February 15 purchase 10,000 units @ $0.69
April 15 purchase 2,000 units @ $1.09
July 15 purchase 4,000 units @ $0.99
October 15 purchase 1,000 units @ $1.19
December15 purchase 2,000 units @ $1.09
My book does not explain very much on how to do the FIFO Method. I would really appreciate any thanks again
To calculate the dollar value of the ending inventory using the First-In, First-Out (FIFO) method, you need to determine the cost of the units sold and the remaining units on hand.
First, let's calculate the cost of the units sold throughout the year:
January 1 beginning inventory: 5,000 units @ $0.89
Cost of units sold = 5,000 units * $0.89 = $4,450
February 15 purchase: 10,000 units @ $0.69
Cost of units sold = 10,000 units * $0.69 = $6,900
April 15 purchase: 2,000 units @ $1.09
Cost of units sold = 2,000 units * $1.09 = $2,180
July 15 purchase: 4,000 units @ $0.99
Cost of units sold = 4,000 units * $0.99 = $3,960
October 15 purchase: 1,000 units @ $1.19
Cost of units sold = 1,000 units * $1.19 = $1,190
December 15 purchase: 2,000 units @ $1.09
Cost of units sold = 2,000 units * $1.09 = $2,180
Now, let's calculate the remaining units on hand on December 31:
January 1 beginning inventory: 5,000 units
February 15 purchase: 10,000 units
April 15 purchase: 2,000 units
July 15 purchase: 4,000 units
October 15 purchase: 1,000 units
December 15 purchase: 2,000 units
Total units on hand = 5,000 + 10,000 + 2,000 + 4,000 + 1,000 + 2,000 = 24,000 units
To find the dollar value of ending inventory, multiply the remaining units on hand by the cost of the most recent purchase:
December 15 purchase: 2,000 units @ $1.09
Ending inventory = 2,000 units * $1.09 = $2,180
Therefore, the dollar value of the ending inventory on December 31 is $2,180.
To calculate the dollar value of ending inventory using the FIFO (First In, First Out) method, you need to assign the cost of each unit based on the order they were purchased.
1. First, arrange the purchases in chronological order:
- January 1: 5,000 units @ $0.89
- February 15: 10,000 units @ $0.69
- April 15: 2,000 units @ $1.09
- July 15: 4,000 units @ $0.99
- October 15: 1,000 units @ $1.19
- December 15: 2,000 units @ $1.09
2. Calculate the cost of the units sold during the year using the FIFO method. Start by totaling the units sold throughout the year. Let's assume that information is not provided.
3. Once you know the total units sold, start subtracting the units from the earliest purchases until you exhaust all the purchases. Assign the cost of the sold units based on the price of the earliest purchase at each step.
4. Finally, calculate the value of the remaining units in ending inventory. Multiply the units remaining on December 31 (17,000 in this case) by the cost per unit from the last purchase made.
To summarize, you need to list the purchases in chronological order, deduct the sold units based on the cost of the earliest purchases, and then calculate the value of the remaining units using the cost of the last purchase.
Please note that specific information, such as the total units sold or the ordering of units sold, is not provided in the question, which can affect the calculation of ending inventory.