Question

Jalloh Company’s record of transactions concerning part X for the month of April was as follows.   

Purchases	sales
Purchases April 1 (balance on hand) 350 @ $6.60	April 5 550
April 4 650 @ 6.73	April 12 450
April 11 550 @ 7.00	April 27 1,300
April18 450 @ 7.06	April 28 150
April 26 850 @ 7.39
April 30 450 @ 7.66

Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost.

Answer 1

• fifo = First In first Out .

  Perpetual means that inventory is calculated after every transactions.

  	PurchasesInventory	Cost of Merchandise Sold	Inventory
  Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit cost	Total cost
  Apr 1	350	$6.60	$2,310				350	$6.60	$2,310
  4	650	$6.73	$4,374.5				350	$6.60	$2,310
  							650	$6.73	$4,374.5
  5				350	$6.60	$2,310	450[650-200]	$6.73	$3,028.5
  				200[550-350]	$6.73	$1,346
  11	550	$7	$3,850				450	$6.73	$3,028.5
  							550	$7	$3,850
  12				450	$6.73	$3,028.5	550	$7	$3,850
  18	450	$7.06	$3,177				550	$7	$3,850
  							450	$7.06	$3,177
  26				850	$7.39	$6,281.5	550	$7	$3,850
  							450	$7.06	$3,177
  							850	$7.39	$6,281.5
  27				550	$7	$3,850	550[850-300]	$7.39	$4,064.5
  				450	$7.06	$3,177
  				300[1,300-450-550]	$7.39	$2,217
  28				150	$7.39	$4,064.5	400[550-150]	$7.39	$2,956
  30	450	$7.66	$3,447				400	$7.39	$2,956
  							450	$7.66	$3,447
  Balance							850		$6,403

  2)LIFO- last in first out . The goods purchased later are sold first

  • 	PurchasesInventory	Cost of Merchandise Sold	Inventory
    Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit cost	Total cost
    Apr 1	350	$6.60	$2,310				350	$6.60	$2,310
    4	650	$6.73	$4,374.5				350	$6.60	$2,310
    							650	$6.73	$4,374.5
    5				550	$6.73	$3,701.5	350	$6.6	$2,310
    							100[650-550]	$6.73	$673
    11	550	$7	$3,850				350	$6.6	$2,310
    							100[650-550]	$6.73	$673
    							550	$7	$3,850
    12				450	$7	$3,150	350	$6.6	$2,310
    							100[650-550]	$6.73	$673
    							100[550-450]	$7	$700
    18	450	$7.06	$3,177				350	$6.6	$2,310
    							100[650-550]	$6.73	$673
    							100[550-450]	$7	$700
    							450	$7.06	$3,177
    26	850	$7.39	$6,281.5				350	$6.6	$2,310
    							100[650-550]	$6.73	$673
    							100[550-450]	$7	$700
    							450	$7.06	$3,177
    							850	$7.39	$6,281.5
    27				850	$7.39	$6,281.5	350	$6.6	$2,310
    				450	$7.06	$3,177	100[650-550]	$6.73	$673
    							100[550-450]	$7	$700
    28				100	$7	$700	350	$6.6	$2,310
    				50	$6.73	$336.5	50[100-50]	$6.73	$336.5
    30	450	$7.66	$3,447				350	$6.6	$2,310
    							50[100-50]	$6.73	$336.5
    							450	$7.66	$3,447
    							850		$6,093.5

c. Average cost

	PurchasesInventory	Cost of Merchandise Sold	Inventory
	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit cost	Total cost
Apr 1	350	$6.60	$2,310				350	$6.60	$2,310
4	650	$6.73	$4,374.5				350	$6.60	$2,310
							650	$6.73	$4,374.5
	1000[350+650]	6.6845[6,684.5/1,000]	$6,684.5
				550	$6.6845	$3,676.475	450[1000-550]	$6.6845	$3,008.025
5	550	$7	$3,850				450	$6.6845	$3.008.025
							550	$7	$3,850
							1000[450+550]	6.858	$6,858.025
12				450	$6.858	$3,086.1	550[1,000-450]	$6.858	$3,771.9
18	450	$7.06	$3,177				550	$6.858	$3,771.9
							450	$7.06	$3,177
							1000[550+450]	$6.9489	$6,948.9
26	850	$7.39	$6,281.5				1000[550+450]	$6.9489	$6,948.9
							850	$7.39	$6,281.5
							1850	$7.152[13,230.4/1850]	$13,230.4
27				1300	$7.152	$9,297.6	550[1850-1300]	$7.152	$3,933.6
28				150	$7.152	$1,072.8	400[550-150]	$7.152	$2,860.8
30	450	$7.66	$3,447				400[550-150]	$7.152	$2,860.8
							450	$7.66	$3,447
							850	$7.421[$6,307.8/850]	$6,307.8

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