Inventory Valuation FIFO LIFO and Average The company report

Inventory Valuation: FIFO, LIFO, and Average The company reported the following inventory data for the year: Practice 9-7 Units Cost per Unit 300 $1750 Beginning inventory Purchases: 900 1,200 400 18.00 18.25 March 23. Units remaining at year-end. . . . . . .. Compute (1) cost of goods sold and (2) ending inventory assuming (a) FIFO inventory valuation, (b)LIFOin- ventory valuation, and (c) average cost inventory valuation. The company uses a periodic inventory system Practice 9-8 Inventory Valuation: Complications with a Perpetual System Refer to Practice 9-7. Assume that the sales occurred as follows: Units Sold 100 600 1,300 July 15 November 1 Total Compute (1) cost of goods sold and (2) ending inventory assuming (a) FIFO inventory valuation, (b) LIFO inven- tory valuation, and (c) average cost inventory valuation, The company uses a perpetual inventory system

Solution

Answer

Units sold = 2400 – 400 = 2000

FIFO

Cost of Goods available for sale

Cost of Goods Sold

Endging Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

Beginning Inventory

300

17.5

5250

300

17.5

5250

0

17.5

0

Purchases:

Mar-23

900

18

16200

900

18

16200

0

18

0

Sep-16

1200

18.25

21900

800

18.25

14600

400

18.25

7300

TOTAL

2400

43350

2000

36050

400

7300

LIFO

Cost of Goods available for sale

Cost of Goods Sold

Endging Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

Beginning Inventory

300

17.5

5250

0

17.5

0

300

17.5

5250

Purchases:

Mar-23

900

18

16200

800

18

14400

100

18

1800

Sep-16

1200

18.25

21900

1200

18.25

21900

0

18.25

0

TOTAL

2400

43350

2000

36300

400

7050

---Average Cost Valuation

Cost of opening units + Purchases = $43350
Opening units + Purchased units = 2400
Average cost = 43350 / 2400 = $18.0625 per unit

Cost of Goods Sold = 2000 units sold x $18.0625 = $36125
Value of ending Inventory = 400 units x $18.0625 = $7225

FIFO

Opening + Purchases

Cost of Goods Sold

Closing Inventory

Opening units

300

17.50

5250

300

17.50

5250.00

Jan 16 Sale

100

17.50

1750

200

17.50

3500.00

Mar 23 Purchase

900

18.00

16200

200

17.50

3500.00

900

18.00

16200.00

July 15 Sale

200

17.50

3500

500

18.00

9000.00

400

18.00

7200

Sept 16 Purchase

1200

18.25

21900

500

18.00

9000.00

1200

18.25

21900.00

Nov 1 Sale

500

18.00

9000

400

18.25

7300.00

800

18.25

14600

TOTAL

2400

43350

2000

36050

400

7300.00

Units

Value

Cost of Goods Sold

2000

36050

Closing Inventory

400

7300

LIFO

Opening + Purchases

Cost of Goods Sold

Closing Inventory

Opening units

300

17.50

5250

300

17.50

5250.00

Jan 16 Sale

100

17.50

1750

200

17.50

3500.00

Mar 23 Purchase

900

18.00

16200

200

17.50

3500.00

900

18.00

16200.00

July 15 Sale

600

18.00

10800

200

17.50

3500.00

0

0.00

0

300

18.00

5400.00

Sept 16 Purchase

1200

18.25

21900

200

17.50

3500.00

300

18.00

5400.00

1200

18.25

21900.00

Nov 1 Sale

1200

18.25

21900

200

17.50

3500.00

100

18.00

1800

200

18.00

3600.00

TOTAL

2400

43350.00

2000

36250.00

400

7100

Units

Value

Cost of Goods Sold

2000

36250

Closing Inventory

400

7100

Moving Average cost

Opening + Purchases

Cost of Goods Sold

Closing Inventory

Opening

300

17.50

5250

300

17.50

5250.00

Jan 16 Sale

100

17.50

1750.00

200

17.50

3500.00

Mar 23 Purchase

900

18.00

16200

0.00

1100

17.91

19700.00

Jul 15 Sale

600

17.91

10745.45

500

17.91

8954.55

Sept 16 Purchase

1200

18.25

21900

1700

18.15

30854.55

Nov 1 Sale

1300

18.15

23594.65

400

18.15

7259.89

Sep 10 Sales

TOTAL

2400

43350.00

2000

36090.11

400

18.15

7259.893

Units

Value

Cost of Goods Sold

2000

36090

Closing Inventory

400

7260

FIFO	Cost of Goods available for sale	Cost of Goods Sold	Endging Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	300	17.5	5250	300	17.5	5250	0	17.5	0
Purchases:
Mar-23	900	18	16200	900	18	16200	0	18	0
Sep-16	1200	18.25	21900	800	18.25	14600	400	18.25	7300
TOTAL	2400		43350	2000		36050	400		7300