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A company that sells transmogrifiers uses FIFO for its inventory accounting. It had 100 transmogrifiers in Inventory on 12/31/2011 with a total cost of $160,000. The company bought 50 transmogrifiers costing $90,000 on 3/3/12; another 50 transmogrifiers costing $100,000 on 6/6/12; and another 100 transmogrifiers costing $250,000 on 9/9/12. During 2012, the company sold 175 transmogrifiers. What was the balance in Inventory on 12/31/2012?

 
 
 
 
 
 
 

FIFO is first-in, first-out. For ending inventory, it is LISH, last-in, still-here. So, Ending Inventory will include the costs of the last 125 transmogrifiers acquired (the company started with 100, purchased 200, and sold 175, leaving 125 in Ending Inventory). This would be the 100 bought on 9/9/2012 and 25 of the 50 bought on 6/6/12: $250,000 + ($100,000/2) = $300,000.

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