Question

Inventory Value This is the first year of transaction for ABC Company; therefore, it doesn't have beginning Inventory. First part purchase: 200 units, each unit $10 Second part purchase :300 units, each unit $20 Sales: 200 units, each $50 1-Calculate Ending Inventory value in three methods (FIFO, LIFO and Average method) 2-Calculate Profit/Loss Element of competency: 1) Save Expenses 2) Produce accounting reports

Answer 1

		FIFO	LIFO	Average Cost
1	Ending Inventory	$6,000	$4,000	$4,800
2	Sales	$10,000	$10,000	$10,000
	Less: Cost of Goods Sold	$2,000	$4,000	$3,200
	Profit	$8,000	$6,000	$6,800
	FIFO
	Units	Unit Cost
	300	$20	$6,000
	Ending Inventory		$6,000
	COGS =	Beginning inventory + Purchases - Ending inventory
	=	$0 + $8,000 - $6,000
	=	$2,000
	LIFO
	Units	Unit Cost
	200	$10	$2,000
	100	$20	$2,000
	Ending Inventory		$4,000
	COGS =	Beginning inventory + Purchases - Ending inventory
	=	$0 + $8,000 - $4,000
	=	$4,000
	Average Cost
	200	$10	$2,000
	300	$20	$6,000
	500		$8,000
	Weighted Average cost per unit		$16
	($8,000/500)
	Ending Inventory	$4,800
	(300 x $16)
	COGS =	Beginning inventory + Purchases - Ending inventory
	=	$0 + $8,000 - $4,800
	=	$3,200