Question

A company that uses a perpetual inventory system made the following cash purchases and sales. There was no beginning inventory.

January 1:	Purchased 100 units at SAR10 per unit
February 5:	Purchased 60 units at SAR 12 per unit
March 16:	Sold 40 Units for SAR 16 per unit

Prepare general journal entries to record the March 16 sale using the

• FIFO inventory valuation method.
• LIFO inventory valuation method.

Answer 1

FIFO inventory Valuation Method
Date	General Journal	Debit	Credit
Mar-16	Cash (40 units * SAR 16)	SAR 640
	Sales		SAR 640
Mar-16	Cost Of Goods Sold (40 Units * SAR 10)	SAR 400
	Inventory		SAR 400

LIFO inventory Valuation Method
Date	General Journal	Debit	Credit
Mar-16	Cash (40 units * SAR 16)	SAR 640
	Sales		SAR 640
Mar-16	Cost Of Goods Sold (40 Units * SAR 12)	SAR 480
	Inventory		SAR 480