Question

Alba Corp. has the following inventory information available for the month of December: Date Number of Units Cost per unit 40 $15 December 1 Beginning Inventory December 10 Purchases 50 $19 December 20 Purchases 60 $18 The company sold 100 units in December. Required: Using the above information, fill in the chart below with the amounts that should be reported for total cost of goods sold for December and the cost of ending inventory at Dec 31 under both the FIFO and LIFO cost flow assumptions. Do not include commas or a decimal point in the answers. FIFO LIFO Cost of Goods Sold $ $ Cost of Ending Inventory $ $

Answer 1

Under the First in first out (FIFO) method of inventory valuation, Cost of goods sold consists of the units from beginning inventory and earliest purchases. Ending inventory consists of the units from recent purchases.

Under the Last in first out (LIFO) method of inventory valuation, Cost of goods sold consists of the units from recent purchases. Ending inventory consists of the units from beginning inventory and earliest purchases.

Cost of goods sold under FIFO = (40 * $15) + (50 * $19) + (10 * $18)

= $600 + $950 + $180

= $1,730

Ending inventory under FIFO = 50 * $18

= $900

Cost of goods sold under LIFO = (60 * $18) + (40 * $19)

= $1,080 + $760

= $1,840

Ending inventory under LIFO = (10 * $19) + (40 * $15)

= $190 + $600

= $790

	FIFO	LIFO
Cost of goods sold	$1,730	$1,840
Cost of ending inventory	$900	$790