Question

Windsor, Inc. uses a periodic inventory system. Its records show the following for the month of May, in which 88 units were sold. Unit Cost $14 May 1 Inventory 15 Purchases 24 Purchases Totals Units 41 34 47 Total Cost $574 578 846 $1,998 122 Compute the ending inventory at May 31 and cost of goods sold using the FIFO and LIFO methods. FIFO LIFO Ending inventory at May 31 $ Cost of goods sold

Answer 1

Solution:

Statement showing Calculation of Ending inventory and COGS following methods

	FIFO	LIFO
The cost of ending inventory at May 31st (122-88)=34units	34 units*$18 =$ 612	34 units*$14 =$ 476
The cost of goods sold (Total cost –cost of ending inventory)	(1,998-614) = $1,386	(1,998-476) = $1,522

Note:

1) In FIFO means first in first out so ending inventory should be from recent purchase made in May 24^th

2) In LIFO means last in first out so ending inventory should be from beginning inventory of May 1st