The following facts pertain to the cost of one product carried in the merchandise inventory of the Herara Store:

Inventory on hand, January 1

200 units @

$20

=

$4.000

Purchase March 18

600 units a

$24

=

14.400

Purchase July 20

800 units 0

$26

=

20.800

Purchase, October 31

400 units @

$30

=

12.000

A physical count of the inventory on December 31 reveals that 500 units are on hand. If the FIFO cost method is used, the inventory should be reported on the balance sheet at:

  1. $40,000.
  2. $36,600.
  3. $14,600.
  4. $11,200.