Question

The records of ABC Company showed the following:

		Units	Unit Cost	Total Cost
January 1	Beginning	10,000	60	600,000
April 1	Purchase	18,000	50	900,000
October 1	Purchase	22,000	40	880,000

The physical inventory reveals 15,000 units on hand on December 31.
Compute the cost of ending inventory and cost of sales using:

Inventory Cost Flow	Ending Inventory	Cost of Goods Sold (COGS)
First in, first out (FIFO)
Weighted Average
Last in, first out (LIFO)

Answer 1

	ABC Company
	Closing Inventory	15000
	Units Sold(50000-15000)	35000
	FIFO Ending Inventory
		Units	Rate	Total cost
	01-Oct	15000	$                        40.00	$                       6,00,000.00
	Total	15000		$                       6,00,000.00
	FIFO -Cost of goods sold
	Cost of goods available for sales	$                                23,80,000
	Less: Ending Inventory(80*$150)	$                                 -6,00,000
	Cost of goods sold	$                                17,80,000
	FIFO Method: First in first out,it means units which are purchased first are sold first.
	Working
	Cost of goods sold
		Unit	Unit Cost	Total Cost
	01-Jan	10000	$                        60.00	$                       6,00,000.00
	01-Apr	18000	$                        50.00	$                       9,00,000.00
	01-Oct	7000	$                        40.00	$                       2,80,000.00
	Total	35000		$                    17,80,000.00
	Unit Price=	Total cost/Total Units
	Unit Price=	($2380000/50000)
	Unit Price=	$                                        47.60
	Weighted Average Inventory
	Ending Inventory(Units)=(A)	15000
	Price per unit=(B)	$                                        47.60
	Ending Inventory Price=(A)*(B)	$                            7,14,000.00
	Cost of goods available for sales	$                          23,80,000.00
	Less: Ending Inventory	$                            7,14,000.00
	Cost of goods sold(35000*$47.60)	$                          16,66,000.00
	Weighted average: Weight are taken for all purchases including beginning inventory to caluclated unit price.
	LIFO Ending Inventory
		Units	Rate	Total cost
	Beginning Inventory	10000	$                        60.00	$                       6,00,000.00
	01-Apr	5000	$                        50.00	$                       2,50,000.00
	Total	15000		$                       8,50,000.00
	LIFO-Cost of goods sold
	Cost of goods available for sales	$                          23,80,000.00
	Less: Ending Inventory	$                           -8,50,000.00
	Cost of goods sold	$                          15,30,000.00
	LIFO Method: Last in first out ,it means inventory which are purchased last,sold first.
	Working
		Unit	Unit Cost	Total Cost
	01-Oct	22000	$                        40.00	$                       8,80,000.00
	01-Apr	13000	$                        50.00	$                       6,50,000.00
	Total	35000		$                    15,30,000.00
		FIFO	weighted Average	LIFO
	Ending Inventory	$                            6,00,000.00	$            7,14,000.00	$                       8,50,000.00
	COGS	$                          17,80,000.00	$         16,66,000.00	$                    15,30,000.00