Question

Joy Co.'s recorded inventory information for the month of August is as follows:

Beginning Inventory	22 units at $15 each
First Purchase	25 units at $18 each
Second Purchase	21 units at $20 each
Sales	48 units

a. Determine the total cost of ending inventory according to FIFO method.
$

b. Determine the total cost of ending inventory according to LIFO method.

$

Answer 1

Answer-a)- The total cost of ending inventory according to FIFO method =$400.

Explanation-

FIFO Method
	Goods purchased		Cost of goods sold			Inventory balance
S.no.	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
1						22	15.00	330
2	25	18.00				22	15.00	330
						25	18.00	450
3	21	20.00				22	15.00	330
						25	18.00	450
						21	20.00	420
4			22	15	330	20	20.00	400
			25	18	450
			1	20	20
Totals			48		800	20	20	400

b)- The total cost of ending inventory according to LIFO method =$300.

Explanation-

LIFO Method
	Goods purchased		Cost of goods sold			Inventory balance
S.no.	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
1						22	15.00	330
2	25	18.00				22	15.00	330
						25	18.00	450
3	21	20.00				22	15.00	330
						25	18.00	450
						21	20.00	420
4			21	20	420	20	15.00	300
			25	18	450
			2	15	30
Totals			48		900	20	15	300