please check my answer thanks :)
You are the manager of The Candle Shop using the FIFO method of inventory pricing, what is the dollar value of the ending inventory if there were 17,000 units on hand Dec 31 Show all of your work
Jan 1 5,000 @ $0.89
Feb15 10,000 @ $0.69
April 15 2,000 @$1.09
July 15 4,000 $0.99
Oct 15 1,000 1.19
Dec 15 2,000 $1.09
5,000 x $0.89 = 4450
10,000 x $0.69 = 6900
2,000 x $1.09 = 2180
4,000 x $0.99 = 3960
1,000 x $1.19 = 1190
2,000 x $1.09 = 2180
+-------
20860
Ok now I am lost what do I do now please help
Well, a lot of the units have been sold and are no longer in inventory. We only have 17,000 of the units left in the store.
We have 2000 of the Dec 15 units
we have 1000 of the Oct 15 units total 3000
we have 4000 of the July units total 7000
we have 2000 april units total 9000
we have only 8000 of the feb units to reach our 17,000
All earlier units are already sold
so add up the values only of those units that are still there in the store
Great job on calculating the dollar value of the individual purchases!
To determine the ending inventory using the FIFO (First-In, First-Out) method, you need to know which units were sold first and which units are still in inventory.
Since you have 17,000 units on hand on December 31st, you have to figure out which purchases make up this quantity.
To do that, you need to work backwards from December 31st to find the most recent purchases. Start subtracting the units from the 17,000 inventory count until you reach zero. The dollar value of the remaining units will be your ending inventory.
Let's break it down step by step:
1. December 31st inventory count: 17,000 units
2. Subtract units from the most recent purchase on October 15th:
- Remaining units: 17,000 - 1,000 = 16,000
3. Subtract units from the next most recent purchase on December 15th:
- Remaining units: 16,000 - 2,000 = 14,000
4. Subtract units from the next purchase on July 15th:
- Remaining units: 14,000 - 4,000 = 10,000
5. Subtract units from the next purchase on April 15th:
- Remaining units: 10,000 - 2,000 = 8,000
6. Subtract units from the next purchase on February 15th:
- Remaining units: 8,000 - 10,000 = -2,000
At this point, you've deducted more units than you initially had in inventory, which isn't possible. We stop here and conclude that the ending inventory consists of 8,000 units.
To calculate the dollar value of the ending inventory, you need to multiply the remaining units by the respective costs:
8,000 x $1.09 = $8,720
So, the dollar value of the ending inventory using the FIFO method is $8,720.
Keep up the good work!