Question

FIFO and LIFO on the following information to calculate the value of ending inventory and the cost of goods sold of March Mar 1 5 14 27 29 Beginning Inventory Purchase Sale Purchase Sale 60 units @ $15.00 140 units @ $15.50 190 units 70 units @ $16.00 30 units Each unit sold for $22

Answer 1

There are two systems of keeping inventory: 1) Perpetual 2) Periodic I'll Calculate Under both systems, Please take solution as per the requirement Perpetual System FIFO Method Date Purchases Cost of goods sold Quantity unit cost Total cost unit cost Total cost Quantity Mar-01 Inventory Quantity unit cost total cost 60 $15.00 $ 900.00 05-Mar 140 $ 15.50 $2,170.00 60 $15.00 140 $15.50 $ 900.00 $2,170.00 14-Mar 10 $15.50 $ 155.00 60 $15.00 130 $15.50 $ 900.00 $2,015.00 27-Mar 70 $ 16.00 $1,120.00 10 $15.50 70 $16.00 $ 155.00 $1,120.00 29-Mar 50 $ 16.00 $ 800.00 10 $15.50 20 $16.00 $ $ 155.00 320.00 220 $3,390.00 $ 800.00 LIFO Method Date Purchases Cost of goods sold Quantity unit cost Total cost unit cost Total cost Quantity Mar-01 Inventory Quantity unit cost total cost 60 $15.00 $ 900.00 05-Mar 140 $ 15.50 $2,170.00 60 $ 15.00 140 $15.50 $ 900.00 $2,170.00 14-Mar 10 $15.00 $ 150.00 50 $15.00 140 $15.50 $ 750.00 $2,170.00 27-Mar 70 $ 16.00 $1,120.00 10 $15.00 70 $16.00 $ 150.00 $1,120.00 29-Mar 30 $16.00 $ 480.00 10 $ 15.00 40 $16.00 $ $ 150.00 640.00 220 $3,400.00 50 $ 790.00

Periodic System FIFO Method: Date Activity 01-Mar Beginning 05-Mar Purchase 27-Mar Purchase No of units Unit cost 60 $ 15.00 140 $ 15.50 70 $ 16.00 Total Cost $ 900.00 $ 2,170.00 $ 1,120.00 Cost of goods available for sale $ 4,190.00 Cost of goods sold : 50 units @ $ 16 $ 800.00 Ending Inventory = Cost of goods available for sale - Cost of goods sold $ 3,390.00 Note : FIFO Method Assumes that Goods which are purchased first will be sold First, So in Ending inventory units will be there which are purchased last. LIFO Method: Date Activity 01-Mar Beginning 05-Mar Purchase 27-Mar Purchase No of units Unit cost 60 $ 15.00 140 $ 15.50 70 $ 16.00 Total Cost $ 900.00 $ 2,170.00 $ 1,120.00 Cost of goods available for sale $ 4,190.00 Cost of goods sold : 50 units @ $ 15 $ 750.00 Ending Inventory = Cost of goods available for sale - Cost of goods sold $3,440.00 Note : LIFO Method Assumes that Goods which are purchased last will be sold First , so in Ending inventory units will be there which are purchased First