Question

The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account: June 1 Balance 25 units at $60 6 Sale 20 units 8 Purchase 20 units at $61 16 Sale 10 units 20 Purchase 20 units at $62 23 Sale 25 units 30 Purchase 15 units at $63 Calculate the cost of the ending inventory at June 30, using (a) the first-in, first-out (FIFO) method and (b) the last-in, first-out (LIFO) method. Identify the quantity, unit price, and total cost of each lot in the inventory. (a) First-In, First-Out (FIFO): June 1 units at $ $ June 8 units at $ Total $ (b) Last-In, First-Out (LIFO): units at $ $ units at $ units at $ Total $

Answer 1

• All working forms part of the answer
• Except ‘’units’’ all amounts are in $
• FIFO method: Calculation of Cost of Goods Sold, cost of Ending Inventory and details of LOT to which ending inventory belongs

FIFO	Opening + Purchases			Cost of Goods Sold			Closing Inventory
June 1 Balance	25	2.40	60				25	2.40	60.00
June 6 Sales			0	20	2.40	48	5	2.40	12.00
June 8 Purchases	20	3.05	61				5	2.40	12.00
							20	3.05	61.00
June 16 Sale				5	2.40	12	15	3.05	45.75
				5	3.05	15.25
June 20 Purchases	20	3.10	62				15	3.05	45.75
							20	3.10	62.00
June 23 Sales				15	3.05	45.75	10	3.10	31.00
				10	3.10	31
June 30 Purchases	15	4.20	63				10	$3.10	$31.00
							15	$4.20	$63.00
TOTAL	80		$246	55		$152	25		$94

Cost of Ending Inventory = $94
Lot detail is in ‘bold’ and ‘underlined’ in Ending Inventory column.

• LIFO Method

LIFO	Opening + Purchases			Cost of Goods Sold			Closing Inventory
June 1 Balance	25	2.40	60				25	2.40	60.00
June 6 Sales				20	2.40	48	5	2.40	12.00
									0.00
June 8 Purchases	20	3.05	61				5	2.40	12.00
							20	3.05	61.00
June 16 Sale				10	3.05	30.5	5	2.40	12.00
							10	3.05	30.50
June 20 Purchases	20	3.10	62				5	2.40	12.00
							10	3.05	30.50
							20	3.10	62.00
June 23 Sales				20	3.10	62	5	2.40	12.00
				5	3.05	15.25	5	3.05	15.25
June 30 Purchases	15	4.20	63				5	$2.40	$12.00
							5	$3.05	$15.25
							15	$4.20	$63.00
TOTAL	80		$246.00	55		$155.75	25		$90.25

Cost of Ending Inventory = $90.25
Lot detail is in ‘bold’ and ‘underlined’ in Ending Inventory column.