Question

Calculate cost of goods sold and ending inventory under each of the following methods given the following information about purchases and sales during the year.

Jan. 1           Beginning Inventory       300 units @ $3

Jan. 5           Sales                                      100 units

Jan. 15        Purchases                           400 units @ $4

Jan. 20        Sales                                      200 units

a. FIFO.

b. LIFO.

Answer 1

Ans.			Periodic FIFO	Perpetual FIFO		Periodic LIFO	Perpetual LIFO
		Ending inventory	1600	1600		1300	1400
		Cost of goods sold	900	900		1200	1100
	FIFO:
	Total cost of goods available for sale:
	Date	Transactions	Units	Rate	Cost
	Jan.1	Beginning inventory	300	3	900
	Jan.15	Purchases	400	4	1600
		Total	700		2500
	Periodic FIFO:
	Ending inventory units = Total units available - Sold units
			700 - (100+200)
			400
	*Cost of ending inventory:
	Date	Transactions	Units	Rate	Cost
	Jan.15	Purchases	400	4	1600
		Total End. Inv.	400		1600
	*Cost of goods sold   = Total cost of goods availble for sale - Cost of ending inventory
			2500 - 1600
			900
	Perpetual FIFO:
		Purchase			Sold			Balance
	Date	Units	Rate	Total cost	Units	Rate	Total cost	Units	Rate	Total cost
	1-Jan	300	3	900				300	3	900
	5-Jan				100	3	300	200	3	600
	15-Jan	400	4	1600				200	3	600
								400	4	1600
	20-Jan				200	3	600	400	4	1600
	Total				COGS		900	End. Inv.		1600
	LIFO:
	Periodic LIFO:
	*Cost of ending inventory:
	Date	Transactions	Units	Rate	Cost
	1-Jan	Beginning inventory	300	3	900
	Jan.15	Purchases	100	4	400
		Total End. Inv.	400		1300
	*Cost of goods sold   = Total cost of goods availble for sale - Cost of ending inventory
			2500 - 1300
			1200
	Perpetual LIFO:
		Purchase			Sold			Balance
	Date	Units	Rate	Total cost	Units	Rate	Total cost	Units	Rate	Total cost
	1-Jan	300	3	900				300	3	900
	5-Jan				100	3	300	200	3	600
	15-Jan	400	4	1600				200	3	600
								400	4	1600
	20-Jan				200	4	800	200	3	600
								200	4	800
	Total				COGS		1100	End. Inv.		1400