Question

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

Jan.	1		Inventory	2,000 units at $4
Feb.	17		Purchase	3,400 units at $5
Jul.	21		Purchase	3,100 units at $6
Nov.	23		Purchase	1,500 units at $7

There are 1,800 units of the item in the physical inventory at December 31. The periodic inventory system is used. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

a. Determine the inventory cost by the first-in, first-out method. Round your answer to the nearest dollar.

$  

1. Determine the inventory cost by the last-in, first-out method. Round your answer to the nearest dollar.

   $  

Answer 1

Answers

• Requirement [a]
  Ending inventory as per FIFO = $ 12,300
• Requirement [b]
  Ending inventory as per LIFO = $ 7,200
• Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2000	$                   4.00	$                        8,000.00	2000	$                 4.00	$                 8,000.00	0	$                   4.00	$                         -
Purchases:
17-Feb	3400	$                   5.00	$                      17,000.00	3400	$                 5.00	$               17,000.00	0	$                   5.00	$                         -
21-Jul	3100	$                   6.00	$                      18,600.00	2800	$                 6.00	$               16,800.00	300	$                   6.00	$            1,800.00
23-Nov	1500	$                   7.00	$                      10,500.00	0	$                 7.00	$                              -	1500	$                   7.00	$          10,500.00
TOTAL	10000		$                      54,100.00	8200		$               41,800.00	1800		$          12,300.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2000	$                   4.00	$                        8,000.00	200	$                 4.00	$                     800.00	1800	$                   4.00	$            7,200.00
Purchases:
17-Feb	3400	$                   5.00	$                      17,000.00	3400	$                 5.00	$               17,000.00	0	$                   5.00	$                         -
21-Jul	3100	$                   6.00	$                      18,600.00	3100	$                 6.00	$               18,600.00	0	$                   6.00	$                         -
23-Nov	1500	$                   7.00	$                      10,500.00	1500	$                 7.00	$               10,500.00	0	$                   7.00	$                         -
TOTAL	10000		$                      54,100.00	8200		$               46,900.00	1800		$            7,200.00