Question

Lisa Company had 115 units in beginning inventory at a total cost of $14,375. The company purchased 230 units at a total cost of $31,050. At the end of the year, Lisa had 92 units in ending inventory.

(a) Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round average-cost per unit and final answers to 0 decimal places, e.g. 1,250.) FIFO LIFO Average-cost The cost of the ending inventory $ $ $ The cost of goods sold $ $ $

Answer 1

Ans.		FIFO	LIFO	Average cost
	The cost of ending inventory	$12,420	$11,500	$12,144
	The cost of goods sold	$33,005	$33,925	$33,281
	*Working   Notes;
	First of all, we will calculate the Cost per unit of each transaction.
	Cost per unit = Total cost / Units
	Transaction		Units (a)	Cost per unit (b/a)	Total (b)
	Beginning inventory		115	$125.00	$14,375
	Purchase		230	$135.00	$31,050
	Cost of goods available for sale		345		$45,425
Ans. 1	Periodic FIFO:
	Transaction	Units	Rate	Total
	Purchase	92	$135.00	$12,420
	Ending inventory	92		$12,420
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$45,425 - $12,420
	$33,005
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory
	units remain from the last purchases.
Ans. 2	Periodic LIFO:
	Transaction	Units	Rate	Total
	Beginning inventory	92	$125.00	$11,500
	Ending inventory	92		$11,500
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$45,425 - $11,500
	$33,925
	*In LIFO method the units that have purchased last, are released the first one and ending inventory units
	remain from the first purchase.
Ans. 3	Average cost:
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$45,425 / 345
	$132	per unit
	Ending inventory =   Average cost per unit * Ending inventory units
	$132 * 92
	$12,144
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$45,425 - $12,144
	$33,281