Question

A company's inventory records indicate the following data for the month of April:

April 1	Beginning	350 units at $18 each
April 5	Purchase	290 units at $20 each
April 9	Sale	500 units at $55 each
April 14	Purchase	250 units at $22 each
April 20	Sale	200 units at $55 each
April 30	Purchase	240 units at $25 each

The company uses the perpetual inventory system What would be the cost of the ending inventory under the following criteria (must show your work):

Last in , First out (LIFO).

First In, First Out (FIFO).

Weighted Average.

Answer 1

Ans.1	Perpetual LIFO:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Apr							350	18	6300
	5-Apr	290	20	5800				350	18	6300
								290	20	5800
	9-Apr				290	20	5800
					210	18	3780	140	18	2520
	14-Apr	250	22	5500				140	18	2520
								250	22	5500
	20-Apr				200	22	4400	140	18	2520
								50	22	1100
	30-Apr	240	25	6000				140	18	2520
								50	22	1100
								240	25	6000
	Total				Cost of goods sold		13980	Ending Inventory		9620
Ans.2	Perpetual FIFO:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Apr							350	18	6300
	5-Apr	290	20	5800				350	18	6300
								290	20	5800
	9-Apr				350	18	6300
					150	20	3000	140	20	2800
	14-Apr	250	22	5500				140	20	2800
								250	22	5500
	20-Apr				140	20	2800
					60	22	1320	190	22	4180
	30-Apr	240	25	6000				190	22	4180
								240	25	6000
	Total				Cost of goods sold		13420	Ending inventory		10180
Ans.3	Weighted Average :
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	1-Apr							350	18	6300
	5-Apr	290	20	5800				640	18.91	12100
	9-Apr				500	18.91	9455	140	18.89	2645
	14-Apr	250	22	5500				390	20.88	8145
	20-Apr				200	20.88	4176	190	20.89	3969
	30-Apr	240	25	6000				430	23.18	9969
	Total				Cost of goods sold		13631	Ending inventory		9969
	*In LIFO method the units that are purchased last are sold first.
	*In FIFO method the units that are purchased Fist are sold first.
	*In Weighted average method the average cost per unit is calculated after each purchase
	by dividing the total cost by the total units available & units are sold on the same rate of previous transaction.