Questions: Multiple Choice Question One identical unit is purchased on each of the following three dates and at the respective costs: June 1 at 10, June 2 at 15, and July 4 at 20. The company sells two units during this period. Conclude which inventory items are sold first and which unit remains in ending inventory if the company is using the FIFO cost flow assumption. O The June 2 at 15 and the July 4 at 20 are both sold; the June 1 at 10 remains in ending inventory. O The June 1 at 10 and the June 2 at 15 are both sold; the July 4 unit remains in ending inventory. O The June 1 at 10 is sold; the June 2 at 15 and the July 4 at 20 remain in ending inventory. O Need help? Review these concept resources. Rate your confidence to submit your answer: High Medium Low

Multiple Choice Question

One identical unit is purchased on each of the following three dates and at the respective costs: June 1 at 10, June 2 at 15, and July 4 at 20. The company sells two units during this period. Conclude which inventory items are sold first and which unit remains in ending inventory if the company is using the FIFO cost flow assumption.

O The June 2 at 15 and the July 4 at 20 are both sold; the June 1 at 10 remains in ending inventory.

O The June 1 at 10 and the June 2 at 15 are both sold; the July 4 unit remains in ending inventory.

O The June 1 at 10 is sold; the June 2 at 15 and the July 4 at 20 remain in ending inventory.

O Need help? Review these concept resources.

Rate your confidence to submit your answer: High Medium Low

Transcript text: Multiple Choice Question One identical unit is purchased on each of the following three dates and at the respective costs: June 1 at $10, June 2 at $15, and July 4 at $20. The company sells two units during this period. Conclude which inventory items are sold first and which unit remains in ending inventory if the company is using the FIFO cost flow assumption. O The June 2 at $15 and the July 4 at $20 are both sold; the June 1 at $10 remains in ending inventory. O The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit remains in ending inventory. O The June 1 at $10 is sold; the June 2 at $15 and the July 4 at $20 remain in ending inventory. O Need help? Review these concept resources. Rate your confidence to submit your answer: High Medium Low

Solution

Answer

The answer is: The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit remains in ending inventory.

Explanation

Option 1: The June 2 at $15 and the July 4 at $20 are both sold; the June 1 at $10 remains in ending inventory.

This option is incorrect because, under the FIFO (First-In, First-Out) method, the earliest purchased items are sold first. Therefore, the June 1 unit should be sold before the June 2 and July 4 units.

Option 2: The June 1 at $10 and the June 2 at $15 are both sold; the July 4 unit remains in ending inventory.

This option is correct. Under the FIFO method, the first units purchased are the first to be sold. Therefore, the units purchased on June 1 and June 2 are sold first, leaving the unit purchased on July 4 in ending inventory.

Option 3: The June 1 at $10 is sold; the June 2 at $15 and the July 4 at $20 remain in ending inventory.

This option is incorrect because, under FIFO, after selling the June 1 unit, the next unit to be sold should be the June 2 unit, not leaving it in inventory.

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