Question

Exercise 6-5

Cheyenne’s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Cheyenne’s purchases of Xpert snowboards during September is shown below. During the same month, 194 Xpert snowboards were sold. Cheyenne’s uses a periodic inventory system.

Date		Explanation		Units		Unit Cost		Total Cost
Sept. 1		Inventory		42		$99		$ 4,158
Sept. 12		Purchases		72		105		7,560
Sept. 19		Purchases		32		108		3,456
Sept. 26		Purchases		80		112		8,960
		Totals		226				$24,134

a. Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods.

b. For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold.

Answer 1

Under periodic inventory system, the records are maintained and updated at the end of the period and not continuously

FIFO method states that inventory purchased first is sold first

LIFO method states that inventory purchased later is sold first

FIFO

Cost of goods sold = 42*99+72*105+32*108+48*112 = $20,550

Ending Inventory = Cost of goods available – cost of goods sold

= 24,134-20,550

= $3,584

LIFO

Cost of goods sold = 80*112+32*108+72*105+10*99

= $20,966

Ending Inventory = $3,168

b.Sum

FIFO = 20,550+3,584 = $24,134

LIFO = 20,966+3,168 = $24,134