Question

Inventory Costing Methods

Tyler Company has the following information related to purchases and sales of one of its inventory items.

Date	Description	Units Purchased at Cost	Units Sold at Retail
Sept. 1	Beginning inventory	400 units @ $17
Sept. 10	Purchase	600 units @ $18
Sept. 20	Sales		700 units @ $31
Sept. 25	Purchase	700 units at $20

Assume the company uses a perpetual inventory system.

Required:

Calculate ending inventory and cost of goods sold using the FIFO, LIFO, and average cost methods.

	FIFO	LIFO	Avg Cost
Cost of goods sold	$?	$?	$ ?
Ending inventory	$?	$?	$?

Answer 1

Solution:

Computation of ending inventory and Cost of Goods sold under FIFO (Perpetual)
Date	Goods Purchased			Cost of goods sold			Inventory Balance
	Units	Cost per unit	Total Cost	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Sep							400	$17.00	$6,800.00
10-Sep	600	$18.00	$10,800.00				400	$17.00	$6,800.00
							600	$18.00	$10,800.00
20-Sep				400	$17.00	$6,800.00	300	$18.00	$5,400.00
				300	$18.00	$5,400.00
25-Sep	700	$20.00	$14,000.00				300	$18.00	$5,400.00
							700	$20.00	$14,000.00
Total				700		$12,200.00	1000		$19,400.00

Computation of ending inventory and Cost of Goods sold under LIFO (Perpetual)
Date	Goods Purchased			Cost of goods sold			Inventory Balance
	Units	Cost per unit	Total Cost	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Sep							400	$17.00	$6,800.00
10-Sep	600	$18.00	$10,800.00				400	$17.00	$6,800.00
							600	$18.00	$10,800.00
20-Sep				600	$18.00	$10,800.00	300	$17.00	$5,100.00
				100	$17.00	$1,700.00
25-Sep	700	$20.00	$14,000.00				300	$17.00	$5,100.00
							700	$20.00	$14,000.00
Total				700		$12,500.00	1000		$19,100.00

Computation of ending inventory and COGS under Average Cost (Perpetual)
Date	Goods Purchased			Cost of Goods sold			Inventory Balance
	Units	Cost per unit	Total Cost	Units	Cost per unit	COGS	Units	Cost per unit	Inventory Balance
1-Sep							400	$17.00	$6,800.00
10-Sep	600	$18.00	$10,800.00				1000	$17.60	$17,600.00
20-Sep				700	$17.60	$12,320	300	$17.60	$5,280.00
25-Sep	700	$20.00	$14,000.00				1000	$19.28	$19,280.00
Total				700		$12,320.00	1000	$19.28	$19,280.00