Question

CARD SAN 2019 51857.58 BE 8-6 Inventory cost flow methods, periodic system Samuelson and Messenger (SAMI began 2021 with 200 units of its one product. These units were purchased near the end of 2017 for $25 each. During the month of January, 100 units were purchased on January 8 for $28 each and another 200 units were purchased on January 19 for $30 each. Sales of 125 units and 100 units were made on January 10 and January 25, respectively. There were 275 units on hand at the end of the month. SAM uses a periodic inventory system. Calculate ending inventory and cost of goods sold for January using (1) FIFO, and (2) average cost. BE 8-8 LIFO method Esquire Inc. uses the LIFO method to value its inventory. Inventory at January 1, 2021, was $500,000 (20,000 units at $25 each). During 2021, 80,000 units were purchased, all at the same price of $30 per unit. 85,000 units were sold during 2021. Esquire uses a periodic inventory system. Calculate the December 31, 2021, ending inventory and cost of goods sold for 2021

Answer 1

FIFO

Cost of goods sold = $5700

Ending Inventory = $8100

Average Cost

Cost of goods sold = $6063.33

Ending Inventory = $7736.67

LIFO

Cost of goods sold = $2525000

Ending Inventory = $375000

Notes

Under FIFO, goods entering the inventory first are sold first

FIFO
	Beginning Inventory			Purchases			Sales / COGS			Ending Inventory
Date	Units	Price	Total	Units	Price	Total	Units	Price	Total	Units	Price	Total
Jan-01	200	25	5000							200	25	5000
Jan-08				100	28	2800				200	25	5000
										100	28	2800
Jan-10							125	25	3125	75	25	1875
										100	28	2800
Jan-19				200	30	6000				75	25	1875
										100	28	2800
										200	30	6000
Jan-25							75	25	1875
							25	28	700	75	28	2100
										200	30	6000
Total	200		5000	300		8800	225		5700	275		8100

Weighted Average workings

Weighted Average
	Beginning Inventory			Purchases			Sales / COGS			Ending Inventory
Date	Units	Price	Total	Units	Price	Total	Units	Price	Total	Units	Price	Total
Jan-01	200	25	5000							200	25.000	5,000.00
Jan-08				100	28	2800				200	25.000	5,000.00
										100	28.000	2,800.00
Weighted Average Price										300	26.000	7,800.00
Jan-10							125	26	3,250.00	125	26.000	3,250.00
Weighted Average Price										175	26.000	4,550.00
Jan-19				200	30	6000				200	30.000	6,000.00
Weighted Average Price										375	28.133	10,550.00
Jun-27							100	28	2,813.33	100	28.133	2,813.33
Weighted Average Price										275	28.133	7,736.67
Total	200		5000	300		8800	225		6,063.33	275		7736.67

LIFO workings

LIFO
	Beginning Inventory			Purchases			Sales / COGS			Ending Inventory
Date	Units	Price	Total	Units	Price	Total	Units	Price	Total	Units	Price	Total
Jan-01	20000	25	500000			0				20000	25	500000
				80000	30	2400000			0	20000	25	500000
										80000	30	2400000
							5000	25	125000	15000	25	375000
							80000	30	2400000	0	30	0
Total	20000		500000	80000		2400000	85000		2525000	15000		375000