Question

6. The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account: June 1 Balance Sale Purchase Sale Purchase Sale Purchase 25 units at $60 20 units 20 units at $61 10 units 20 units at $62 25 units 15 units at $63 Determine the cost of the inventory balance at June 30, using (1) the first-in, first-out method and (2) the last-in, first-out method. Identify the quantity, unit price, and total cost of each lot in the inventory.

Answer 1

1) FIFO First in, First out method Ending Inventory $ 1,565 Quantity Unit price 10 $ Total Cost 62 $ 620 15 $ 945 63 25 1,565 Working Notes Cost of goods sold Unit price Ending Balance Unit price 25 $ Purchases Unit price Quantity Quantity Quantity Total Cost Date Cost 60 $ June 1 1,500 20 $ 60 $ 60 $ 5 $ June 6 1,200 300 20 $ 60 S 5 S June 8 61 300 20 $ 61 $ 1,220 5 $ 60 $ 61 $ June 16 300 61 $ 5 $ 15 S 305 915 15 $ 61 $ June 20 20 $ 915 20 $ 62 $ 1,240 15 $ 10 $ 61 $ June 23 915 62 $ 10 $ 62 $ 62 $ 63 $ 620 620 15 $ 10 $ June 30 63 620 15 $ 945 $ Total 3,340 25 1,565 62

(2) LIFO Last in, First Out method Ending Inventory 1,550 Quantity Unit price Total Cost 60 $ 5 $ 300 5 $ 61 305 15 $ 63 945 $ 25 1,550 Working Notes Ending Balance Unit price Purchases Cost of goods sold Unit price Quantity Unit price Quantity Quantity Total Cost Date Cost 25 $ 60 $ 1,500 June 1 20 $ 60 $ 60 $ 5 S June 6 1,200 300 60 $ 61 $ 20 $ 5 $ June 8 61. 300 20 $ 1,220 10 $ 61 $ 5 $ 10 $ 60 $ June 16 610 300 61 $ 610 20 $ 60 $ 5 $ June 20 62. 300 61 $ 62 $ 10 S 610 20 $ 1,240 20 $ 62 $ 60 $ 5 S June 23 1,240 300 61 $ 61 $ 5 $ 5 S 305 305 5 $ 60 $ 15 $ June 30 63 300 61 $ 63 $ 5 S 305 15 $ 945 $ Total 3,355 25 1,550