Question

Inventory information for Part 311 of Blue Corp. discloses the following information for the month of June. Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO. Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, what is the gross profit if the inventory is valued at FIFO?

June 1		Balance		297 units @ $14		June 10		Sold		204 units @ $35
11		Purchased		803 units @ $17		15		Sold		497 units @ $36
20		Purchased		505 units @ $19		27		Sold		296 units @ $39

Answer 1

Cost of goods sold and ending inventory under (1) LIFO and (2) FIFO is as calculated below:

FIFO
Date	Explanation	Units	Unit Cost	Cost
Jun-01	Opening Inventory	297	14.00	4,158
Jun-11	Purchased Inventory	803	17.00	13,651
Jun-20	Purchased Inventory	505	19.00	9,595
	Cost of goods available for sale	1,605		27,404
Jun-30	Ending Inventory
	Goods Purchased on June 11	103	17.00	1,751
	Goods Purchased on June 20	505	19.00	9,595
		608		11,346
	Cost of goods sold
	Opening Inventory	297	14.00	4,158
	Goods Purchased on June 11	700	17.00	11,900
		997		16,058
LIFO
Date	Explanation	Units	Unit Cost	Cost
Jun-01	Opening Inventory	297	14.00	4,158
Jun-11	Purchased Inventory	803	17.00	13,651
Jun-20	Purchased Inventory	505	19.00	9,595
	Cost of goods available for sale	1,605		27,404
Jun-30	Ending Inventory
	Opening Inventory	297	14	4,158
	Goods Purchased on June 11	311	17.00	5,287
		608		9,445
	Cost of goods sold
	Goods Purchased on June 20	505	19.00	9,595
	Goods Purchased on June 11	492	17.00	8,364
		997		17,959

gross profit if the inventory is valued at FIFO by perpetual method is:

Sales
June 10	7,140
June 15	17,892
June 27	11,544
	36,576
Less: Cost of goods sold
June 10 (204*14)	2,856
June 15 (93*14 +404*17)	8,170
June 27 (296*17)	5,032
	16,058
Gross profit	20,518