Question

The following inventory was available for sale during the year for Dolphin Tools: Beginning inventory 10 units at $120 First purchase 15 units at $165 Second purchase 30 units at $210 Third purchase 20 units at $195 Dolphin Tools has 25 units on hand at the end of the year. What is the dollar amount of inventory at the end of the year according to the first-in, first-out method

Answer 1

Answer:

The dollar amount of inventory at the end of the year is $4,950

Explanation:

Because the inventory method is FIFO (first in first out) then the ending of inventory is last purchases

 

Dolphin Tools has 25 units on hand at the end of the year, which include 20 units in 3rd  purchase at $195 and 5 units in 2nd purchase at $210

= 20 *$195 + 5*$210 = $4,950

Answer 2

Answer:

The value of ending inventory is $4950.

Explanation:

The FIFO or First In First Out method is a method of inventory valuation that follows that a business sells first the inventory that it purchased first. thus, the closing inventory is made up of in order of the most recent purchases and are valued at the price at which those units are purchases.

The ending inventory of 25 units for Dolphin tools is made up of 20 units purchased at $195 and 5 units purchased at $210 by Dolphin.

Thus, the year end inventory value under FIFO is,

Ending inventory = 20 * 195  +  5 * 210  =  $4950