Question

FIFO and LIFO Costs Under Perpetual Inventory System

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

Beginning inventory	31 units at $42
Sale	24 units at $63
First purchase	39 units at $44
Sale	37 units at $64
Second purchase	28 units at $46
Sale	7 units at $65

The firm uses the perpetual inventory system, and there are 30 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?
$

Answer 1

a)	Cost of Ending Inventory according to FIFO is $1,376
b)	Cost of Ending Inventory according to FIFO is $1,348
Explanation:-
a)				Perpetual FIFO
	Purchases			Cost of Goods Sold			Inventory
Explanation	Quantity	Unit Cost ($)	Total Cost ($)	Quantity	Unit Cost ($)	Total Cost ($)	Quantity	Unit Cost ($)	Total Cost ($)
Beginning Inventory							31	42	1,302
Sale				24	42	1,008	7	42	294
First Purchase	39	44	1,716				39	44	1,716
Sale				7	42	294
				30	44	1,320	9	44	396
Second Purchase	28	46	1,288				28	46	1,288
Sale				7	44	308	2	44	88
							28	46	1,288
Ending Inventory :-	Explanation			Quantity	Unit Cost ($)	Total Cost ($)
		First Purchase		2	44	88
		Second Purchase		28	46	1,288
				30		1,376
b)				Perpetual LIFO
	Purchases			Cost of Goods Sold			Inventory
Explanation	Quantity	Unit Cost ($)	Total Cost ($)	Quantity	Unit Cost ($)	Total Cost ($)	Quantity	Unit Cost ($)	Total Cost ($)
Beginning Inventory							31	42	1,302
Sale				24	42	1,008	7	42	294
First Purchase	39	44	1,716				39	44	1,716
Sale				37	44	1,628	7	42	294
							2	44	88
Second Purchase	28	46	1,288				28	46	1,288
Sale				7	46	322	7	42	294
							2	44	88
							21	46	966
Ending Inventory :-	Explanation			Quantity	Unit Cost ($)	Total Cost ($)
		Beginning Inventory		7	42	294
		First Purchase		2	44	88
		Second Purchase		21	46	966
				30		1,348