Question

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

Beginning inventory	45 units at $44
Sale	42 units at $64
First purchase	23 units at $45
Sale	10 units at $66
Second purchase	26 units at $48
Sale	22 units at $67

The firm uses the perpetual inventory system, and there are 20 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

	Using FIFO Method:	Purchases			Sold			Closing
		Units	Rate	Amt	Units	Rate	Amt	Units	Rate	Amt
	Beginning Inventory							45	44	1980
	Sales				42	44	1848	3	44	132
	Purchases	23	45	1035				3	44	132
								23	45	1035
	Sales				3	44	132	16	45	720
					7	45	315
	Purchases	26	48	1248				16	45	720
								26	48	1248
	Sales				16	45	720	20	48	960
					6	48	288
	Total	94		4263	74		3303	20		960
	Using LIFO Method:	Purchases			Sold			Closing
		Units	Rate	Amt	Units	Rate	Amt	Units	Rate	Amt
	Beginning Inventory							45	44	1980		FIFO	960
	Sales				42	44	1848	3	44	132		LIFO	909
	Purchases	23	45	1035				3	44	132
								23	45	1035
	Sales				10	45	450	3	44	132
								13	45	585
	Purchases	26	48	1248				3	44	132
								13	45	585
								26	48	1248
	Sales				22	48	1056	3	44	132
								13	45	585
								4	48	192
	Total	94		4263	74		3354	20		909