Question

30. Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

Jan. 1   Beginning inventory = 16 units at a price of $10 each

Jan. 11 Purchased inventory = 14 units at a price of $12 each

Jan. 20 Purchased inventory = 23 units at a price of $15 each

On January 14, Beech Soda, Inc. sold 25 units of this product.

The other 28 units remained in inventory at January 31.

Assuming that Beech Soda uses the FIFO flow assumption, the cost of goods sold to be recorded at January 14 is:

31. Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows:

Jan. 1   Beginning inventory = 16 units at a price of $10 each

Jan. 11 Purchased inventory = 14 units at a price of $12 each

Jan. 20 Purchased inventory = 23 units at a price of $15 each

On January 14, Beech Soda, Inc. sold 25 units of this product.

The other 28 units remained in inventory at January 31.

Assuming that Beech Soda uses the LIFO flow assumption, the cost of goods sold to be recorded at January 14 is:

Answer 1

Summary of the information contained in the question :

• FIFO :
• FIFO assumes units purchased first will be sold first. Hence to make sales of 25 units on Jan-14 firstly 16 units for beginning inventory must been used and remaining 9 units shall be from jan-11 purchase
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• LIFO :
• LIFO assumes units purchased last will be sold first. Hence to make sales of 25 units on Jan-14 firstly 14 units from jan-11 purchase must been used and remaining 11 units shall be from beginning inventory
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