Question

The following is a record of Tamarisk Company’s transactions for Boston Teapots for the month of May 2020.

May 1

Balance

464 units

@

$20.00

May 10

Sale

348 units

@

$34.00

12

Purchase

696 units

@

$25.00

20

Sale

626 units

@

$34.00

28

Purchase

464 units

@

$30.00

Assuming that perpetual inventories are not maintained and that a physical count at the end of the month shows 650 units on hand, what is the cost of the ending inventory using (1) FIFO and (2) LIFO?

		(1) FIFO		(2) LIFO
Ending Inventory		$		$

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Assuming that perpetual records are maintained and they tie into the general ledger, calculate the ending inventory using (1) FIFO and (2) LIFO.

		(1) FIFO		(2) LIFO
Ending Inventory		$		$

Answer 1

Correct Answer:

Periodic Inventory	FIFO	LIFO
Cost of Ending Inventory	$ 18,570.00	$      13,930.00

Working:

	Cost of Goods Available for sale
Date		Units	Cost per unit	value
01-May	Beginning Inventory	464	$              20.00	$            9,280.0
12-May	Purchases	696	$              25.00	$         17,400.0
28-May	Purchases	464	$              30.00	$       13,920.00
	Total	1624		$       40,600.00

               

	Periodic FIFO
A	Total Units Available for sale			1624			$               40,600
	Units Sold			974
	Ending Inventory Units			650
	Valuation
	Cost of Goods Sold		464		$               20.00		$            9,280.00
			510		$               25.00		$               12,750
B	Cost of Goods Sold		974	units			$               22,030
A-B	Ending Inventory		650	units			$               18,570

	Periodic LIFO
A	Total Units Available for sale			1624			$               40,600
	Units Sold			974
	Ending Inventory Units			650
	Valuation
	Cost of Goods Sold		464		$               30.00		13,920.00
			510		$               25.00		12,750.00
B	Cost of Goods Sold		974	units	$               25.00		$         26,670.00
A-B	Ending Inventory		650	units			$         13,930.00

Requirement 2:

Perpetual	FIFO	LIFO
Cost of Ending Inventory	$ 18,570.00	$      17,990.00

Working:

Cost of Ending Inventory for Perpetual FIFO will be same as Periodic FIFO.

	Perpetual LIFO
A	Total Units Available for sale			1624			$               40,600
	Units Sold			974
	Ending Inventory Units			650
	Valuation
	Cost of Goods Sold		348		$               20.00		6,960.00
			626		$               25.00		15,650.00
B	Cost of Goods Sold		974	units	$               25.00		$         22,610.00
A-B	Ending Inventory		650	units			$         17,990.00

End of Answer.

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