Question

Consider the following information for Maynor Company, which uses a perpetual inventory system:

	Transaction	Units		Unit Cost			Total Cost
January 1	Beginning Inventory	10		$	60		$	600
March 28	Purchase	20			66			1,320
August 22	Purchase	20			70			1,400
October 14	Purchase	25			76			1,900
Goods Available for Sale		75					$	5,220

The company sold 25 units on May 1 and 20 units on October 28.

Required:

Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.

1. FIFO
2. LIFO
3. Weighted Average

Answer 1

Solution :

Method	Cost of Goods Sold	Ending Inventory Cost
FIFO	$ 2,970	$ 2,250
LIFO	$ 3,140	$ 2,080
Weighted Average	$ 3,048	$ 2,172

Working :

(a) Schedule of Inventory based on FIFO Method :

Date	Purchases			Cost of Goods Sold			Ending Inventory
	Qty.	Unit Cost	Total Cost	Qty	Units Cost	Total Cost	Qty.	Unit Cost	Total Cost
Jan 1							10	$ 60	$ 600
Mar 28	20	$ 66	$ 1,320				10	$ 60	$ 600
							20	$ 66	$ 1,320
May 1				10	$ 60	$ 600
				15	$ 66	$ 990	5	$ 66	$ 330
Aug 22	20	$ 70	$ 1,400				5	$ 66	$ 330
							20	$ 70	$ 1,400
Oct 14	25	$ 76	$ 1900				5	$ 66	$ 330
							20	$ 70	$ 1,400
							25	$ 76	$ 1,900
Oct 28				5	$ 66	$ 330
				15	$ 70	$ 1,050	5	$ 70	$ 350
							25	$ 76	$ 1,900
Total	65		$ 4,620	45		$ 2,970	30		$ 2,250

(b) Schedule of Inventory based on LIFO Method :

Date	Purchases			Cost of Goods Sold			Ending Inventory
	Qty.	Unit Cost	Total Cost	Qty	Units Cost	Total Cost	Qty.	Unit Cost	Total Cost
Jan 1							10	$ 60	$ 600
Mar 28	20	$ 66	$ 1,320				10	$ 60	$ 600
							20	$ 66	$ 1,320
May 1				20	$ 66	$ 1,320
				5	$ 60	$ 300	5	$ 60	$ 300
Aug 22	20	$ 70	$ 1,400				5	$ 60	$ 300
							20	$ 70	$ 1,400
Oct 14	25	$ 76	$ 1900				5	$ 60	$ 300
							20	$ 70	$ 1,400
							25	$ 76	$ 1,900
Oct 28				20	$ 76	$ 1,520	5	$ 60	$ 300
							20	$ 70	$ 1,400
							5	$ 76	$ 380
Total	65		$ 4,620	45		$ 3,140	30		$ 2,080

(c) Schedule of Inventory based on Weighted Average Method :

Date	Purchases			Cost of Goods Sold			Ending Inventory
	Qty.	Unit Cost	Total Cost	Qty	Units Cost	Total Cost	Qty.	Unit Cost	Total Cost
Jan 1							10	$ 60	$ 600
Mar 28	20	$ 66	$ 1,320				30	$ 64	$ 1,920
May 1				25	$ 64	$ 1,600	5	$ 64	$ 320
Aug 22	20	$ 70	$ 1,400				25	$ 68.8	$ 1,720
Oct 14	25	$ 76	$ 1900				50	$ 72.4	$ 3,620
Oct 28				20	$ 72.4	$ 1,448	30	$ 72.4	$ 2,172
Total	65		$ 4,620	45		$ 3,048	30		$ 2,172

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