Question

Linda’s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Linda’s purchases of Xpert snowboards during September is shown below. During the same month, 151 Xpert snowboards were sold. Linda’s uses a periodic inventory system. Date Explanation Units Unit Cost Total Cost Sept. 1 Inventory 33 $100 $ 3,300 Sept. 12 Purchases 56 103 5,768 Sept. 19 Purchases 25 109 2,725 Sept. 26 Purchases 63 110 6,930    Totals 177 $18,723

A) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods.

FIFO METHOD:

1) The ending inventory at September 30:

2) Cost of goods sold:  

LIFO METHOD:

1) The ending inventory at September 30:

2) Cost of goods sold:

B) For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold.

		FIFO		LIFO
The sum of ending inventory and cost of goods sold		$		$

Answer 1

number of units in ending inventory

Ending inventory = Beginning inventory+ purchases made during the month - units sold during the month

=33+56+25+63-151=26.

FIFO METHOD

a. Computation of ending inventory at September 30

26× $110= $2,860.

b. Computation of goods sold for September 30 under FIFO

Cost of units on September 30 (beginning inventory)

33 units @$ 100 = $3,300

Add cost of units produced during the month

56 units @ $103 = $5768

25 units @ $109 =. $2725

63 units @ $110= $6930

Total cost of units available for sale $18,723

(-) cost of units in ending inventory ($2,860)

Total cost of 151 units sold during the September

Month( i.e cost of goods sold for September 30) $15,863

LIFO METHOD

a. Computation of ending inventory at September 30

26 units @ $100= $2,600

b. computation of goods sold for September 30 under LIFO method

Cost of units on September 30 ( beginning inventory)

33 units @ $100= $3,300

Add cost of units produced during the month

56 units @ $103= $5768

25 units @ $109= $2725

63 units @ $110= $6930

Total cost of units available for sale $18,723

(-) cost of units in ending inventory ($2,600)

Total cost of 151 units sold during the September

Month (i.e cost of goods sold for September) $16,123

B.

Particulars FIFO LIFO

The sum of ending inventory

and cost of goods sold $18,723 $18,723

____×____

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