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FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for...

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Accounting

FIFO and LIFO

Costs Under Perpetual Inventory System

The following units of an item were available for sale duringthe year:

Beginning inventory 47 units at $44

Sale 20 units at $68

First purchase 17 units at $47

Sale 33 units at $69

Second purchase 15 units at $48

Sale 7 units at $70

The firm uses the perpetual inventory system, and there are 19units of the item on hand at the end of the year.

a. What is the total cost of the ending inventory according toFIFO?

b. What is the total cost of the ending inventory according toLIFO?

Answer & Explanation Solved by verified expert
3.8 Ratings (651 Votes)

a)

Inventory ledger (FIFO Method)

Purchases Cost of goods sold Balance
Units Rate Value Units Rate Value Units Rate Value
Beg. inventory 47 44 2,068
Sale 20 44 880 27 44 1,188
Purchase 17 47 799 27 44 1,188
17 47 799
Sale 27 44 1,188
6 47 282 11 47 517
Purchase 15 48 720 11 47 517
15 48 720
Sale 7 47 329 4 47 188
15 48 720

Ending inventory = 188 + 720

= $908

b)

Inventory ledger (LIFO Method)

Purchases Cost of goods sold Balance
Units Rate Value Units Rate Value Units Rate Value
Beg. inventory 47 44 2,068
Sale 20 44 880 27 44 1,188
Purchase 17 47 799 27 44 1,188
17 47 799
Sale 17 47 799
16 44 704 11 44 484
Purchase 15 48 720 11 44 484
15 48 720
Sale 7 48 336 11 44 484
8 48 384

Ending inventory = 484 + 384

= $868

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