Closing Inventory using Perpetual FIFO (video below)
A firm has the following transactions with its product R.
1 January 20X3 Opening inventory: nil
1 February 20X3 Buys 15 units at $100 per unit
11 February 20X3 Buys 19 units at $75 per unit
1 April 20X3 Sells 11 units at $150 per unit
1 August 20X3 Buys 7 units at $50 per unit
1 December 20X3 Sells 19 units at $150 per unit
The firm uses Perpetual FIFO to value its inventory. What is the inventory value at the end of the year?
Answer
Closing inventory $650
| Inventory | Unit | |||
| Purchases | Sales | Balance value | cost | |
| Units | Units | Units | $ | $ |
| 15 | 15 | 1,500 | 100 | |
| 19 | 1,425 | 75 | ||
| 34 | 2,925 | |||
| 11 | (1,100) 11 x 100 | |||
| 23 | 1,825 | |||
| 7 | 350 | 50 | ||
| 30 | 2,175 | |||
| 19 | (1,525)* | |||
| 16 | 650 |
* 4 @ $100 + 15 @ $75 = $1,525