Question

In: Accounting

FIFO & LIFO periodic inventory system

Below is the information relating to Montel purchases of snowboards during september ,during the same month 120 snoeboards were sold .Montel uses periodic inventory system.

 

Date Transaction                              Unit unit cost
1-Sep Inventory 20 $100.00 
12-Sep Purchase 45 $103.00 
19-Sep Purchase 20 $104.00 
26-Sep Purchase 50 $105.00 

Compute the ending Inventory under FIFO and LIFO method and Cost of Goods sold.

What you notice about in the both method regarding Cost of Goods sold and ending inventory

 

Solutions

Expert Solution

Date Transaction Unit unit cost Cost
1-Sep Inventory 20 $100.00  $2,000 
12-Sep Purchase 45 $103.00  $4,635 
19-Sep Purchase 20 $104.00  $2,080 
26-Sep Purchase 50 $105.00  $5,250 
Cost of Goods available for sale $13,965 
         
         
  Ending Inventory (FIFO)      
26-Sep Purchase 15 $105.00  $1,575 
         
         
  Cost of Goods Sold =Cost of Goods available for sale-Ending Inventory     $12,390 
         
         
  Ending Inventory (LIFO)      
1-Sep Inventory 15 $100.00  $1,500 
         
  Cost of Goods Sold =Cost of Goods available for sale-Ending Inventory     $12,465 
         
         
when the price is increasing trend cost of goods sold is lower and ending inventory is higher in FIFO compared to LIFO        

 

Cost of Goods Sold =Cost of Goods available for sale-Ending Inventory- $12,390

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