Question

Purchases

1- June 400 @ $6.00

16- June 2,200 @ $6.30

Sales

4- June    200 @ $8.45

26 - June 1,200 @ $9.25

1. Assuming that perpetual inventory records are kept, the Cost of Goods Sold and Ending Inventory using LIFO cost flow assumption is (label which is which):

2. Assuming that perpetual inventory records are kept, the Cost of Goods Sold and Ending Inventory using FIFO cost flow assumption is (label which is which):

Answer 1

Correct Answer:

	FIFO	LIFO
Cost of Goods Sold	$   8,700.00	$        8,760.00
Cost of Ending Inventory	$   7,560.00	$        7,500.00

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	400	$                6.00	$            2,400.0
Purchases	2200	$                6.30	$         13,860.0
Total	2600		16260

	FIFO
A	Total Units Available for sale			2600			$               16,260
	Units Sold			1400
	Ending Inventory Units			1200
	Valuation
	Cost of Goods Sold		400		$                  6.00		$            2,400.00
			1000		$                  6.30		$                  6,300
B	Cost of Goods Sold		1400	units			$                  8,700
A-B	Ending Inventory		1200	units			$                  7,560

	LIFO
A	Total Units Available for sale			2600			$               16,260
	Units Sold			1400
	Ending Inventory Units			1200
	Valuation
	Cost of Goods Sold		200		$                  6.00		1,200.00
			1200		$                  6.30		7,560.00
B	Cost of Goods Sold		1400	units			$            8,760.00
A-B	Ending Inventory		1200	units			$            7,500.00

End of answer.

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