Question

Sheridan Company uses a perpetual inventory system. Data for product E2-D2 include the following purchases.

Date		Number of Units		Unit Price
May 7		40		$7
July 28		25		14

On June 1, Sheridan sold 20 units, and on August 27, 25 more units.

Compute the cost of goods sold using (a) FIFO, (b) LIFO, and (c) average-cost. (Round average cost per unit to 3 decimal places, e.g. 1.246.)

		Cost of Goods Sold
FIFO		$enter the cost of goods sold amount as per FIFO in dollars
LIFO		$enter the cost of goods sold amount as per LIFO in dollars
Average-cost		$enter the cost of goods sold amount as per Average-cost in dollars

Answer 1

:: FIFO Method - Perpetual Inventory.

>> Cost of Goods sold = ( 40 * $ 7 ) + ( 5 * $ 14 )

>> Cost of Goods sold = $ 350..

:: LIFO Method - Perpetual Inventory

>> Cost of Goods sold = ( 20 * $ 7 ) + ( 25 * $ 14 )

>> Cost of Goods sold = $ 490

:: Average cost - Perpetual Inventory

>> Average cost on Aug 27th = [ ( 20 * $ 7 ) + ( 25 * $ 14 ) ] / ( 20 + 25 )

>> Average cost on Aug 27th = $ 10.889

>> Cost of Goods sold = ( 20 * $ 7 ) + ( 25 * $ 10.889 )

>> Cost of Goods sold = $ 412.225

>> Cost of Goods sold = $ 412