Dobler Company uses a periodic inventory system. Details for the inventory account for the month of January 2022 are as follows: Units Per unit price Total Balance, 1/1/2022 300 $5.00 $1500 Purchase, 1/15/2022 150 ..5.30 795 Purchase, 1/28/2022 150 ..5.50 825 An end of the month (1/31/2022) inventory showed that 240 units were on hand. If the company uses FIFO, what is the value of the ending inventory

$1,302

Explanation:

FIFO is an inventory valuation method in which the date of purchase of an item of inventory is key to the selection of that item for sale. FIFO means First in First out  and is a  system mostly adopted for items with expiry date.

It is a system that allows inventory items bought first to be sold before inventory items purchased subsequently.

Given;

                                       Units         Per unit price         Total Balance

1/1/2022                           300              $5.00                     $1500

Purchase, 1/15/2022        150              $5.30                      $795

Purchase, 1/28/2022       150              $5.50                      $825

Total                                  600

This means that units sold = 600 - 240

= 360

This 360 units sold must have included 300 units from 1/1/2020 and 60 units from the purchase on 1/15/2022.

Thus the balance of 240 units includes 90 units from purchases made on 1/15/2022 and the Purchase made on 1/28/2022. The value of the ending inventory

= ($5.30 * 90) + ($5.50 * 150)

= $1,302

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