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A company has beginning inventory of 11 units at a cost of $29 each on February 1. On February 3, it purchases 39 units at $31 each. 17 units are sold on February 5. Using the periodic FIFO inventory method, what is the cost of the 17 units that are sold?

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Answer:

The cost of the 17 units that are sold is $505

Explanation:

The FIFO is a method used to account value for inventory. Under the method, the first item of inventory purchased is the first one sold.

The company has beginning inventory of 11 units on February 1. On February 3, it purchases 39 units and sells 17 units on February 5.

Using the periodic FIFO inventory method,

The cost of the 17 units that are sold = 11 (beginning inventory on February 1) x $29 + 6 (purchasing inventory on February 3)x $31 = $505

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