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11 September, 19:55

Inventory records for Dunbar Incorporated revealed the following: Date Transaction Number of Units Unit Cost Apr. 1 Beginning inventory 500 $2.40 Apr. 20 Purchase 400 2.50 Dunbar sold 700 units of inventory during the month. Ending inventory assuming FIFO would be: Select one:

A. $500.

B. $470.

C. $490.

D. $480.

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Answers (2)
  1. 11 September, 20:31
    0
    option (A) $500

    Explanation:

    Given:

    Date Transaction Number of Units Unit Cost

    Apr. 1 Beginning inventory 500 $2.40

    Apr. 20 Purchase 400 $2.50

    Now,

    Number of units sold = 700

    Number of units available for sale = Beginning Inventory + Purchases

    = 500 + 400

    = 900

    Now,

    using the LIFO approach,

    700 units that has been sold includes 500 units of beginning inventory and 200 units of April 20 purchases.

    Therefore,

    Ending Inventory = Number of units available for sale - Number of units sold

    = 900 - 700

    = 200 units

    Cost of ending inventory = 200 units * $2.50

    = $500

    Hence,

    The correct answer is option (A) $500
  2. 11 September, 22:17
    0
    Option (A) is correct.

    Explanation:

    Dunbar sold 700 units during the month.

    Dunbar uses FIFO inventory system,

    Number of units available for sale = Beginning Inventory + Purchases

    Number of units available for sale = 500 + 400

    Number of units available for sale = 900

    700 units sold includes 500 units of beginning inventory and 200 units of April 20 purchases.

    Ending Inventory = Number of units available for sale - Number of units sold

    Ending Inventory = 900 - 700

    Ending Inventory = 200 units

    Ending Inventory includes 200 units of April 20 purchases:

    Ending Inventory = 200 units * $2.50

    Ending Inventory = $500
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