Question

E6.5 (LO 2) Elsa’s Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Elsa’s purchases of Xpert snowboards during September is shown below. During the same month, 121 Xpert snowboards were sold. Elsa’s uses a periodic inventory system. Date Explanation Units Unit Cost Total Cost Sept. 1 Inventory 26 $97 $2,522 Sept. 12 Purchases 45 102 4,590 Sept. 19 Purchases 20 104 2,080 Sept. 26 Purchases 50 105 5,250 Totals 141 $14,442

Instructions

a. Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method.

b. For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold. What do you notice about the answers you found for each method?

Compute inventory and cost of goods sold using FIFO and LIFO.

Jerry J. Weygandt; Paul D. Kimmel; Donald E. Kieso. Accounting Principles, 13th Edition (Page 6-37). . Kindle Edition.

Answer 1

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

	FIFO	LIFO
Cost of ending inventory	20*105 = 2100	20*97 = 1940
Cost of goods sold	14442-2100 = 12342	14442-1940 = 12502

Prove :

FIFO Cost of goods sold = (26*97+45*102+20*104+30*105) = $12342

LIFO COst of goods sold = (50*105+20*104+45*102+6*97) = $12502

b. For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold. What do you notice about the answers you found for each method?

	FIFO	LIFO
Sum of ending inventory and cost of goods sold	12342+2100 = 14442	1940+12502 = 14442