Question

FIFO and LIFO Costs Under Perpetual Inventory System

The following units of an item were available for sale during the year:

Beginning inventory	46 units at $41
Sale	32 units at $57
First purchase	40 units at $43
Sale	44 units at $58
Second purchase	16 units at $46
Sale	6 units at $59

The firm uses the perpetual inventory system, and there are 20 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?
$

I need the step by step solutions

Answer 1

(a)-FIFO Inventory Schedule

Date	Goods Purchased			Cost of goods sold			Inventory Balance
	# of Units	Cost per unit	Total Cost	# of Units	Cost per unit	Cost of goods sold	# of Units	Cost per unit	Inventory Balance
Beginning inventory							46	41	1,886
				32	41	1,312	14	41	574
	40	43	1,720				14	41	574
							40	43	1,720
				14	41	574	10	43	430
				30	43	1,290
	16	46	736				10	43	430
							16	46	736
				6	43	258	4	43	172
							10	43	430
TOTAL						3,434	20		908

The total cost of the ending inventory according to FIFO = $908

(b)-LIFO Inventory Schedule

Date	Goods Purchased			Cost of goods sold			Inventory Balance
	# of Units	Cost per unit	Total Cost	# of Units	Cost per unit	Cost of goods sold	# of Units	Cost per unit	Inventory Balance
Beginning inventory							46	41	1,886
Sale				32	41	1,312	14	41	574
First Purchase	40	43	1,720				14	41	574
							40	43	1,720
Sale				40	43	1,720	10	41	410
				4	41	164
Second Purchase	16	46	736				10	41	410
							16	46	736
Sale				6	46	276	10	41	410
							10	46	460
TOTAL						3,472	20		870

The total cost of the ending inventory according to LIFO = $870