Question
A company uses the FIFO method of inventory valuation.
The following purchases and sales were made during the month of April: • April 1: Opening stock = 100 units @ ₹10 each • April 5: Purchase = 200 units @ ₹12 each • April 10: Sale = 150 units • April 20: Purchase = 100 units @ ₹15 each • April 25: Sale = 150 units What is the closing inventory value on April 30?Solution
Let’s compute using FIFO (First-In, First-Out) — oldest inventory is used/sold first. April 10 Sale of 150 units: • 100 units @ ₹10 = ₹1,000 (from opening stock) • 50 units @ ₹12 = ₹600 (from Apr 5 purchase) → COGS = ₹1,600 Inventory after April 10: • Remaining: 150 units from Apr 5 purchase @ ₹12 • Value: 150 × ₹12 = ₹1,800  April 20 Purchase: • 100 units @ ₹15 = ₹1,500 Inventory before April 25 Sale: • 150 units @ ₹12 • 100 units @ ₹15 • Total = 250 units April 25 Sale of 150 units (FIFO): • 150 units @ ₹12 = ₹1,800 (all from Apr 5 lot) → COGS = ₹1,800 Remaining Inventory: • 100 units @ ₹15 = ₹1,500 (from Apr 20) Closing Inventory = ₹1,500
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