Question

Inventory information for Part 311 of Monique Aaron Corp. discloses the following information for the month of June. June 1 Balance 300 units @ $10 June 10 Sold 200 units @ $24 11 Purchased 800 units @ $12 15 Sold 500 units @ $25 20 Purchased 500 units @ $13 27 Sold 300 units @ $27 Your answer is incorrect. Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO. (2) (1) LIFO FIFO Cost of Goods Sold A Ending Inventory A

Answer 1

LIFO Method.

>> Closing inventory units = [ 300 + 800 + 500 ] - [ 200 + 500 +300 ] = 600 Units.

>> Cost of goods available for sale = ( 300 * $ 10 ) + ( 800 * $ 12 ) + ( 500 * $ 13 ) = $ 19100.

>> Closing inventory value = ( 300 * $ 10 ) + ( 300 * $ 12 ) = $ 6600.

>> Cost of Goods sold = $ 19100 - $ 6600 = $ 12500.

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FIFO Method.

>> Closing inventory units = [ 300 + 800 + 500 ] - [ 200 + 500 +300 ] = 600 Units.

>> Cost of goods available for sale = ( 300 * $ 10 ) + ( 800 * $ 12 ) + ( 500 * $ 13 ) = $ 19100.

>> Closing inventory value = ( 500 * $ 13 ) + ( 100 * $ 12 ) = $ 7700.

>> Cost of Goods sold = $ 19100 - $ 7700 = $ 11400.

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