Question

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

 

Answer 1

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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