Question

Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a perpetual inventory system. The following are the transactions for the month of July. Unit Units Cost $45 July 1 July 5 July 13 July 17 July 25 July 27 Beginning Inventory Sold Purchased Sold Purchased Sold 2,500 1,250 6,500 3,500 8.500 55 200CE Calculate the cost of ending inventory and cost of goods sold assuming a perpetual inventory system is used in combination with (a) FIFO and (b) LIFO. "venton (a) FIFO WM FIFO (Perpetual) Cost per Total Unit S 4500 $ 112.500 2.500 July 25 Beginning Inventory Purchases July 13 July 25 Total Purchases Goods Available for Sale Cost of Goods Sold Inits from Rerinninn Inventory 6.500 S 49.00 8.500 5 55.00 786.000 898,500

Answer 1

Ans. A	Total units sold =   (1,250 + 3,500 + 5,500) = 10,250 units
	FIFO (Perpetual)
		Units	Cost per unit	Total
	Beginning inventory	2500	$45	$112,500
	Purchases
	Jul-13	6500	$49	$318,500
	Jul-25	8500	$55	$467,500
	Total Purchases			$786,000
	Goods available for sale			$898,500
	Cost of goods sold :
	Units from beginning inventory	2500	$45	$112,500
	Units from July 13 purchase	6500	$49	$318,500
	Units from July 25 purchase	1250	$55	$68,750
	Total cost of goods sold			$499,750
	Ending inventory			$398,750
	*In FIFO method the units that have purchased first (earliest), are released the first one and the ending inventory
	units remain from the last (recent) purchases.
Ans.b	LIFO (Perpetual)
		Units	Cost per unit	Total
	Beginning inventory	2500	$45	$112,500
	Purchases
	Jul-13	6500	$49	$318,500
	Jul-25	8500	$55	$467,500
	Total Purchases			$786,000
	Goods available for sale			$898,500
	Cost of goods sold :
	Units from beginning inventory	1250	$45	$56,250
	Units from July 13 purchase	3500	$49	$171,500
	Units from July 25 purchase	5500	$55	$302,500
	Total cost of goods sold			$530,250
	Ending inventory			$368,250
	*In LIFO method the units that have purchased last, are released the first one and the ending inventory
	units remain from the first purchases.