Question

FIFO and LIFO periodic inventory methods. The Rock Shop shows the following data related to an item of inventory: Inventory, January 1 200 units @ $5.00 Purchase, January 9 600 units @ $5.40 Purchase, January 19 140 units @ $6.00 Inventory, January 31 200 units Instructions (a) What value should be assigned to the ending inventory using FIFO? (b) What value should be assigned to cost of goods sold using LIFO?

Answer 1

Rock shop
In periodic inventory, dates are not considered for calculating cost of each sale, instead cost of goods sold is calculated at the end of period
FIFO ( periodic )
	Cost of goods available for sale			COGS			Ending Inventory
Date	No. of units	cost p.u	Cost of goods available for sale	No. of units	cost p.u	COGS	No. of units	cost p.u	Ending inventory
beg. Inv.	200	5	1000	200	5	1000
Purchases	600	5.4	3240	540	5.4	2916	60	5.4	324
	140	6	840				140	6	840
	940		5080	740		3916	200		1164	Answer a
LIFO ( periodic )
	Cost of goods available for sale			COGS			Ending Inventory
Date	No. of units	cost p.u	Cost of goods available for sale	No. of units	cost p.u	COGS	No. of units	cost p.u	Ending inventory
beg. Inv.	200	5	1000				200	5	1000
Purchases	600	5.4	3240	600	5.4	3240
	140	6	840	140	6	840
	940		5080	740		4080	200		1000
						Answer b