In Inflationary Period , FIFO Method shows
the Highest Net income
Because its cost of goods sold includes the units which are
purchased at low cost
Periodic Method Average Cost Method No of units Unit cost Total Cost Date Activity $ 420$ 6.00 1050 6.08 $ 2,520.00 01-Apr Beginning Inventory 04-Apr purchase 6,384.00 08-Apr purchase 13-Apr purchase 21-Apr purchase 29-Apr purchase 560 6.40 $ 3,584.00 840 $ $ 5,460.00 6.50 490 $ 6.60 $ 3,234.00 350$ 6.79 $ 2,376.50 Cost of goods available for sale 23,558.50 $ Average Cost per Unit $23558.50/3710 6.35
Periodic Method LIFO Method Units No of units Unit cost Total Cost Purchases Date Activity 01-Apr Beginning Inventory 04-Apr purchase 3710 420 6.00 1050 6.08 $ 560 $ 6.40 Less : Sales 2,520.00 490 6,384.00 Ending Inventory 3220 08-Apr purchase 13-Apr purchase 3,584.00 840 $ 6.50 $ 5,460.00 21-Apr purchase 490 $ 6.60 $ 3,234.00 $ 29-Apr purchase 350 6.79 2,376.50 Cost of goods available for sale 23,558.50 Ending Inventory 490 units 420 units @ $6 $ 2,520 70 units @ $6.08 426 Cost of Ending Inventory 2,946 Note LIFO Method assumes that goods which are purchased last will be sold first SO. Ending inventory consists of units which are purchased first
Periodic Method Average Cost Method Units Activity No of units Unit cost Total Cost Purchases Date 3710 420 6.00 1050 $ 6.08 $ 01-Apr Beginning Inventory 04-Apr purchase Less: Sales 2,520.00 490 6,384.00 Ending Inventory 3220 560 6.40 $ 08-Apr purchase 13-Apr purchase 3,584.00 840 $ 6.50 $ 5,460.00 490 $ 6.60 21-Apr purchase 3,234.00 29-Apr purchase 350 6.79 2,376.50 Cost of goods available for sale 23,558.50 $23558.50/3710 $ Average Cost per Unit 6.35 Ending Inventory 490 units 490 units@ $6.35 $ 3,112 Cost of Ending Inventory $ 3,112 Note Avg cost method assumes that goods are sold at avg cost per unit Therefore, Ending inventory will also be valued at avg cost per unit Round off taken upto 2 decimals Note
Perpetual System FIFO Method Cost of goods sold Purchases Date Inventory Quantity unit cost total cost 4206.00 2,520.00 unit cost Total cost Quantity unit cost Total cost Quantity Apr-01 350 6.00 70 6.00 $ 2,100.00 Apr-03 420.00 1050 $ 6.08 70 6.00 Apr-04 6,384.00 420.00 1050 $6.08 $6,384.00 560 6.40 70$6.00 $ 3,584.00 Apr-08 420.00 1050 6.08 6,384.00 560 6.40 3,584.00 70$ 6.00 140 6.08 560 6.40 $ 09-Apr 420.00 851.20 $ 5,532.80 910 6.08 3,584.00 280 6.40 1,792.00 140 6.08 $ 851.20 $1,792.00 11-Apr 280 6.40 840 6.50 280 6.40 5,460.00 1,792.00 13-Apr 840 6.50 5,460.00 490 6.60 $ 3,234.00 280 6.40 $1,792.00 21-Apr 840 6.50 5,460.00 3,234.00 490$6.60 23-Apr 280 6.40 280 6.50 1,792.00 1,820.00 490 6.60 560 $ 6.50 3,640.00 3,234.00 280 6.50 140 6.60 $ 27-Apr 1,820.00 924.00 350 6.60 $2,310.00 350 6.79 2,376.50 140 6.60 $ 29-Apr 924.00 350 6.79 2,376.50 $ 3,301 490 AA AA
Perpetual System LIFO Method Cost of goods sold Purchases Date Inventory Quantity unit cost total cost 4206.00 2,520.00 unit cost Total cost Quantity unit cost Total cost Quantity Apr-01 350 6.00 70 6.00 $ 2,100.00 Apr-03 420.00 1050 $ 6.08 70 6.00 6,384.00 Apr-04 420.00 1050 $6.08 6,384.00 560 6.40 70$6.00 $ 3,584.00 420.00 Apr-08 1050 $6.08 6,384.00 560 6.40 3,584.00 560 6.40 3,584.00 70 6.00 $ 09-Apr 420.00 420 6.08 630 6.08 3,830.40 2,553.60 420 6.08 $2,553.60 70 6.00 $ 11-Apr 420.00 210 $6.08 $1,276.80 840 $ 70 6.00 5,460.00 420.00 13-Apr 6.50 210 6.08 1,276.80 840 6.50 5,460.00 490 6.60 $ 3,234.00 70 6.00 $ 21-Apr 420.00 210 6.08 $1,276.80 840 6.50 5,460.00 490 6.60 3,234.00 490 6.60 70$6.00 $ 23-Apr 420.00 3,234.00 350 6.50 2,275.00 210 6.08 490 6.50 1,276.80 3,185.00 490 6.50 70$6.00 $ 27-Apr 3,185.00 420.00 140 6.08 $ 70 6.08 $ 851.20 425.60 350 6.79 2,376.50 70 6.00 29-Apr $ 420.00 70 6.08 $ 426 350$6.79$ 2,377 $ 490 3,222 AA
Periodic Method FIFO Method Units Activity No of units Unit cost Total Cost Purchases Date 3710 420 6.00 1050 6.08 $ 560 $ 6.40 Less: Sales 01-Apr Beginning Inventory 04-Apr purchase 2,520.00 490 6,384.00 Ending Inventory 3220 3,584.00 08-Apr purchase 13-Apr purchase $ 490 6.60 $ 350 6.79$ 840 $ 6.50 5,460.00 21-Apr purchase 3,234.00 29-Apr purchase 2,376.50 Cost of goods available for sale 23,558.50 Less Ending Inventory 490 units 350 units @ $6.79 $ 2,377 140 units @ $6.6 924 Cost of Ending Inventory 3,301 Cost of goods sold cost of goods available for sale Cost of ending inventory $ 20,258 Note FIFO Method assumes that goods which are purchased first will be sold first SO. Ending inventory consists of units which are purchased last