Question

You are provided with the following information for Novak Corp. Novak Corp. uses the periodic system of accounting for its inventory transactions.

March		1		Beginning inventory 1,930 liters at a cost of 60¢ per liter.
March		3		Purchased 2,450 liters at a cost of 65¢ per liter.
March		5		Sold 2,395 liters for $1.05 per liter.
March		10		Purchased 4,190 liters at a cost of 72¢ per liter.
March		20		Purchased 2,510 liters at a cost of 80¢ per liter.
March		30		Sold 5,265 liters for $1.35 per liter.

Calculate the value of ending inventory that would be reported on the balance sheet, under each of the following cost flow assumptions. (Round answers to 2 decimal places, e.g. 125.25.)

(1)	Specific identification method assuming:
	(i)	The March 5 sale consisted of 1,000 liters from the March 1 beginning inventory and 1,395 liters from the March 3 purchase; and
	(ii)	The March 30 sale consisted of the following number of units sold from beginning inventory and each purchase: 465 liters from March 1; 565 liters from March 3; 2,900 liters from March 10; 1,335 liters from March 20.
(2)	FIFO
(3)	LIFO

Answer 1

	Liters (a)	Rate (b)	Amount (a*b)
Beginning inventory	1,930	$0.60	$1,158
Purchases Mar. 3	2,450	$0.65	$1,593
Purchases Mar. 10	4,190	$0.72	$3,017
Purchases Mar. 20	2,510	$0.80	$2,008
Liters available for sale	11,080
Less: Liters sold
Mar. 5	2,395
Mar. 30	5,265
Liters in Ending Inventory	3,420
1) Specific Identification:	Liters (a)	Rate (b)	Amount (a*b)
From Beginning Inventory (1,930 - 1,000 - 465)	465	$0.60	$279
From Purchases Mar. 3 (2,450 - 1,395 - 565)	490	$0.65	$319
From Purchases Mar. 10 (4,190 - 2,900)	1,290	$0.72	$929
From Purchases Mar. 20 (2,510 - 1,335)	1,175	$0.80	$940
Ending Inventory under Specific Identification	3,420		$2,466
2) FIFO:
Purchases Mar. 20	2,510	$0.80	$2,008
Purchases Mar. 10 (3,420 - 2,510)	910	$0.72	$655
Ending Inventory under FIFO	3,420		$2,663
3) LIFO:
Beginning inventory	1,930	$0.60	$1,158
Purchases Mar. 3 (3,420 - 1,930)	1,490	$0.65	$969
Ending Inventory under LIFO	3,420		$2,127