Question

Calculating FIFO Inventory Values

The Mann Corporation began operations in 2015. Information relating to the company’s purchases of inventory and sales of products for 2015 and 2016 is presented below.

2015
January 1	Purchase	200	units	@	$10	per unit
April 1	Sold	120	units	@	$25	per unit
July 1	Purchase	100	units	@	$14	per unit
September 1	Sold	130	units	@	$25	per unit

2016
January 1	Purchase	100	units	@	$16	per unit
April 1	Sold	80	units	@	$30	per unit
July 1	Purchase	100	units	@	$18	per unit
September 1	Sold	100	units	@	$35	per unit

Calculate the FIFO cost of goods sold and ending inventory for 2015 and 2016 assuming use of (a) the periodic method and (b) the perpetual method.

a. FIFO Periodic. Round to nearest whole number.

2015
Cost of goods sold	$Answer
Ending inventory	$Answer

2016
Cost of goods sold	$Answer
Ending inventory	$Answer

b. FIFO Perpetual. Round to nearest whole number.

2015
Cost of goods sold	$Answer
Ending inventory	$Answer

2016
Cost of goods sold	$Answer
Ending inventory	$Answer

Answer 1

• Basic Conceptual Note or Trick:
  >Cost of Goods Sold and Ending Inventory under FIFO method WILL BE SAME whether Periodic Method is in use or Perpetual Method is in use.
• Hence, answer for Requirement [a] and [b] will be SAME.
• Working:

2015
Sale = 120+ 130 = 250 units

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	0	$                       -	$                                     -	0	$                      -	$                              -	0	$                        -	$                         -
Purchases:
01-Jan	200	$                10.00	$                        2,000.00	200	$               10.00	$                 2,000.00	0	$                 10.00	$                         -
01-Jul	100	$                14.00	$                        1,400.00	50	$               14.00	$                     700.00	50	$                 14.00	$                700.00
TOTAL	300		$                        3,400.00	250		$                 2,700.00	50		$                700.00

2016
Sale = 80 + 100 = 180 units

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	50	$                14.00	$                            700.00	50	$               14.00	$                     700.00	0	$                 14.00	$                         -
Purchases:
01-Jan	100	$                16.00	$                        1,600.00	100	$               16.00	$                 1,600.00	0	$                 16.00	$                         -
01-Jul	100	$                18.00	$                        1,800.00	30	$               18.00	$                     540.00	70	$                 18.00	$            1,260.00
TOTAL	250		$                        4,100.00	180		$                 2,840.00	70		$            1,260.00

• ANSWERS

[a]

2015
Cost of goods sold	$ 2,700
Ending inventory	$ 700

2016
Cost of goods sold	$ 2,840
Ending inventory	$ 1,260

[b]

2015
Cost of goods sold	$ 2,700
Ending inventory	$ 700

2016
Cost of goods sold	$ 2,840
Ending inventory	$ 1,260