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hi i have come across a problem in bpp revision kit.
an inventory account shows the following details:
50 units in stock at a cost of 40$ per unit
100 units purchased at 45$ per unit
80 units sold
50 units purchased at 50 $ per unit
60 units sold
So what is the inventory using the FIFO method?answer in the book is 2950$
plz solve it for me I have a cbe after three days
thankshey shujaattt,
Well, that is FIFO – First in First out ,
so keep in mind that those goods that were in stock / purchased first, go out first when sold.Solution will be the following
Inventory balance b/f : 50 units @ $40 = $2,000
Purchased 100 units @ $45 = $4,500
(u firstly sell those 50 that were in stock as they have different price from units that were purchased later)
Sold 50 units @ $ 40 = (2,000)
Sold 30 units @ $45 = (1,350)
(80 – 50 = 30 , you sell them out of 100 purchased)
Purchased 50 units @ $50 = 2,500
Sold 60 units @ $45 = (2,700)
(After you sold 30 out of 100, you were left with 70 of those, so now u sell 60 out of those)Balance c/f
10 units @ $45 = $450
50 units @ $50 = $2,500
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60 units with NBV of $2,950Well u can simply add and deduct those above to find the answer quickly:
2,000 + 4,500 – 2,000 – 1,350 + 2,500 – 2,700 = 2,950very best of luck with your CBE!
don’t forget to try CBE demo available at ACCA global and check examiner’s reports with solutions to some tricky past exam questions.Initial stock = 50 *40
Purchase = 100*45
Sold = 80 that means 50 from the initial stock and 30 from the purchase . This means closing inventory so far (100-30)*45 – 70*45
Purchase = 50*50
Sold = 60 that means 60 units from the previous closing inventory of 70*45. This leaves you with closing final inventory of :
(70-60)*45 = 10*45 = 450
last purchase 50*50 = 2500
Closing inventory 2950
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