Value of closing inventory Using FIFO ( video below)

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

                      121,400

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