Question

The following units of an item were available for sale during the year: Beginning inventory 20 units @ $44 Sale 12 units @ $68 First purchase 29 units @ $46 Sale 23 units @ $69 Second purchase 23 units @ $49 Sale 15 units @ $70 The firm uses the perpetual inventory system, and there are 22 units of the item on hand at the end of the year.

a. What is the total cost of the ending inventory according to FIFO? $

b. What is the total cost of the ending inventory according to LIFO? $

Answer 1

a. FIFO

Purchases	Sales	Balance
Beginning inventory		20$44=$880
	12$44	8$44=$352
29$46=$1,334		8$44=$352
		29$46=$1,334
	8$44=$352
	15$46=$690	14$46=$644
23$49=$1,127		14$46=$644
		23$49=$1,127
	14$46=$644
	1$49=$49	22$49=$1,078

Total cost of the ending inventory according to FIFO is $1,078

b. LIFO

Purchases	Sales	Balance
Beginning inventory		20$44=$880
	12$44	8$44=$352
29$46=$1,334		8$44=$352
		29$46=$1,334
	23$46=$1,058	8$44=$352
		6$46=$276
23$49=$1,127		8$44=$352
		6$46=$276
		23$49=$1,127
	15$49=$735	8$44=$352
		6$46=$276
		8$49=$392

Total cost of the ending inventory according to LIFO is $1,020 ($352+276+392)