Question

1. FIFO and LIFO Costs Under Perpetual Inventory System

   The following units of an item were available for sale during the year:

   Beginning inventory	35 units at $47
   Sale	21 units at $68
   First purchase	33 units at $49
   Sale	9 units at $68
   Second purchase	22 units at $50
   Sale	16 units at $68

   The firm uses the perpetual inventory system, and there are 44 units of the item on hand at the end of the year.

   a. What is the total cost of the ending inventory according to FIFO?
   $

   b. What is the total cost of the ending inventory according to LIFO?
   $

Answer 1

FIFO(First In First Out) means the initial purchase goods is sold first, therefore, ending inventory valued with rate of recent purchases. LIFO(Last In First Out) means goods purchased at end is sold first, so ending inventory is valued at initial rate.

a) FIFO (First In First out): - The total cost of ending inventory is - calculated below particular purchase umits Rate Sale Cossuel units Rate & & ending Inventory mits Rates 35 47 1,645 Begining Inventory sale 21 47 987 114 47 1658 purchase (First 33 49 1617 14 47 658 33 49 1617 sale 19 47 423 5 33 47 235 49 1617 22 50 1100 purchase (Second) S. 47 235 149 1617 22 50 1100 5 47 235 22 49 1078 sale 11 49 539 22 Iso 11100 Total Ending Inventay I cost of Ending Inventory (FIFO) z 8218 22178

6 LIFO Clast In First out) The total cost of ending inventory is calculated below: particolar purchase sales issue) ending Inventory . imits Rate s e mits Rate & comits Rate & Begining 35 47 1,645 Inventory sale 21 47 987 114.47 1658 3 49 1617 14 purchase (First) 47 658 49 1617 sale | 22 50 1100 purchase (Second) 9 49 441 14 47 658 24 49 1176 114 47 658 24 49 176 22 50 11000 sale 50 800 114 47 1658 24 149 1176 1650 1306 Ending Inventory 44 21341 cost of Ending Inventory (LIFO) $2134