Question

Requirement 2. Prepare a perpetual inventory record for the merchandise inventory using the LIFO inventory costing method. Start by entering the beginning inventory balances. Enter the transactions in chronological order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual record, calculate the quantity and total cost of merchandise inventory purchased, sold, and on hand at the end of the period. (Enter the oldest inventory layers first.) Purchases Unit Cost Total Cost Cost of Goods Sold Units Total Quantity Cost Cost Date Quantity Aug. 1 45 $ 35 $ 1,575 90 $ 54 $ 4,860 Inventory on Hand Unit Total Quantity | Cost Cost 50 $ 35 $ 1,750 5 $ 35 $ 175 5 $ 35 $ 175 $ 54$ 4,860 $ 35 $ 175 54 $ 270 35 $ $ 54 $ 270 $ 870 $ 1,315 85 $ 54 4,590 30 15 $ 58 $ 870 105 $ 5,730 130 $ Totals 6,165

Answer 1

2) LIFO Perpetual Method:-

Under LIFO method, the goods purchased last are sold first.

Calculation of Cost of goods sold under LIFO (Amounts in $)

Date	Purchases			Cost of Goods Sold			Inventory on Hand
	Quantity (a)	Unit Cost (b)	Total Cost (a*b)	Quantity (c)	Unit Cost (d)	Total Cost (c*d)	Quantity (e)	Unit Cost (f)	Total Cost (e*f)
Aug. 1							50	$35	$1,750
3				45	$35	$1,575	5	$35	$175
8	90	$54	$4,860				5	$35	$175
							90	$54	$4,860
21				85	$54	$4,590	5	$35	$175
							5	$54	$270
30	15	$58	$870				5	$35	$175
							5	$54	$270
							15	$58	$870
Totals	105		$5,730	130		$6,165	25		$1,315

Therefore cost of goods sold is $6,165 and cost of ending inventory is $1,315 under LIFO.

3) Weighted Average Method:-

Under weighted average inventory method, weighted average cost is calculated after every purchase. Weighted average cost per unit is equal to total cost of goods available for sale divided by total units available for sale.

Calculation of Cost of goods sold and Ending Inventory (Amounts in $)

Date	Purchases			Cost of Goods Sold			Inventory on Hand
	Quantity (a)	Unit Cost (b)	Total Cost (a*b)	Quantity (c)	Unit Cost (d)	Total Cost (c*d)	Quantity (e)	Unit Cost (f)	Total Cost (e*f)
Aug. 1							50	$35	$1,750
3				45	$35	$1,575	5	$35	$175
8	90	$54	$4,860				5	$35	$175
							90	$54	$4,860
Average							95	$53	$5,035
21				85	$53	$4,505	10	$53	$530
30	15	$58	$870				10	$53	$530
							15	$58	$870
Totals	105		$5,730	130		$6,080	25		$1,400

Therefore cost of goods sold is $6,080 and cost of ending inventory is $1,400 under Weighted Average Method.