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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