In: Accounting
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An astensk (*) will appear to the night of an incorrect entry. Only final inventory cost-Column K - will be graded.
Based on the above data, inventory will be higher using the first in first out method.
EX 6-5 Perpetual inventory using LIFO
Beginning inventory, purchases, and sales data for prepaid cell phones for December are as follow:
a. Assuming that the perpetual inventory system is used, costing by the LIFO method, determine the cost of goods sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 4.
b. Based upon the preceding data, would you expect the inventory to be higher or lower using the first-in, first-out method?
6-5
a) Using LIFO
Prepaid Cell Phones | |||||||||
Date | Purchases | Cost of goodss sold | Inventory | ||||||
Qty | Rate | Value | Qty | Rate | Value | Qty | Rate | Value | |
Dec.1 | 310 | $ 88 | $ 27,280 | ||||||
Dec.10 | 144 | $ 90 | $ 12,960 | 310 | $ 88 | $ 27,280 | |||
144 | $ 90 | $ 12,960 | |||||||
Dec.12 | 144 | $ 90 | $ 12,960 | 214 | $ 88 | $ 18,832 | |||
96 | $ 88 | $ 8,448 | |||||||
Dec.14 | 166 | $ 88 | $ 14,608 | 48 | $ 88 | $ 4,224 | |||
Dec.20 | 240 | $ 96 | $ 23,040 | 48 | $ 88 | $ 4,224 | |||
240 | $ 96 | $ 23,040 | |||||||
Dec.31 | 200 | $ 96 | $ 19,200 | 48 | $ 88 | $ 4,224 | |||
40 | $ 96 | $ 3,840 | |||||||
Dec.31 | Balances | $ 55,216 | $ 8,064 |
b)
When the FIFO method used inventory value is higher because of the latest purchases which are in closing inventory purchased at a higher price.
EX-6-6 : Using FIFO
Prepaid Cell Phones | |||||||||
Date | Purchases | Cost of goodss sold | Inventory | ||||||
Qty | Rate | Value | Qty | Rate | Value | Qty | Rate | Value | |
Dec.1 | 310 | $ 88 | $ 27,280 | ||||||
Dec.10 | 144 | $ 90 | $ 12,960 | 310 | $ 88 | $ 27,280 | |||
144 | $ 90 | $ 12,960 | |||||||
Dec.12 | 240 | $ 88 | $ 21,120 | 70 | $ 88 | $ 6,160 | |||
144 | $ 90 | $ 12,960 | |||||||
Dec.14 | 70 | $ 88 | $ 6,160 | 48 | $ 90 | $ 4,320 | |||
96 | $ 90 | $ 8,640 | |||||||
Dec.20 | 240 | $ 96 | $ 23,040 | 48 | $ 90 | $ 4,320 | |||
240 | $ 96 | $ 23,040 | |||||||
Dec.31 | 48 | $ 90 | $ 4,320 | 88 | $ 96 | $ 8,448 | |||
152 | $ 96 | $ 14,592 | |||||||
Dec.31 | Balances | $ 54,832 | $ 8,448 |