Question

Using the Data below

a) Prepare FIFO, LIFO, average valueto ending inventory.

b) Prepare all entries for either FIFO or LIFO – including closing entries

Use periodic inventory

March 1 – Had 2,200 liters at $.63 each

March 3 – Purchased 2,550 liters at .70 each

March 5 SOLD 2,400 at $1.10

March 11 Purchased 4,100 liters at .74 each

March 20 Purchased 2,600 liters at .80 each

March 30 Sold 5,500 liters for $1.25

Answer 1

ACCRODING TO FIFO METHOD UNITS IS (2200+2550+4100+2600-2400-5500)=3550 UNITS IS INVENTORY

WHICH VALUE IS( 2600*..8) +(950*.74)=$ 2783

ACCRODING TO LIFO METHOD UNITS IS 2600+950= 3550 BUT THESE UNITS IS SAVED FROM FIRST AND SECOND LOTS SO VALUE IS (2200*.63)+(150*.7)+(1200*.74)=$2379

ACCRODING TO AVERAGE METHOD UNITS IS 3550 BUT THESE UNITS ALSO SAVED FROM THE LAST TWO LOTS BUT THE VALUE IS

2200 UNITS 1386

2550 UNITS 1785

TOTAL UNITS 4750 IS 3171

SOLD 2400 UNITS AVERAGE BASIS IS 3171*2400/4750= 1602

THEN 2350 UNITS IS BALANCE IS 1569

PURCHASED 4100 UNITS IS 3034

PURCHASE 2600 UNITS IS 2080

TOTAL UNITS IS 9050 IS (1569+3034+2080) = 6683

SOLD 5500 UNITS IS = 6683*5500/9050= 4061

SO THE CLOSING INVENTORY 3550 UNITS IS 6683-4061= $ 2622

ENTRIES ( FIFO METHOD)

MAR.1

OPENING ENTRY FOR STOCK - NO ENTRY PASSED

MAR .3

DR. GOODS $ 1785

CR. CASH $ 1785

MAR.5 DR CASH $2640

CR GOODS$ 1526

CR PROFIT ON GOODS $ 1114

MAR.11 DR GOODS $ 3034

CR. CASH $ 3034

MAR 20 DR GOODS $ 2080

CR CASH $ 2080

MAR 30 DR CASH $6875

CR GOODS $ 3976

PROFIT ON GOODS $ 2899

CLOSING ENTRY WILL NOT BE PASSED

ACCRODIN TO LIFO METHOD

MAR .1 NO ENTRY

MAR .3 DR GOODS $ 1785

CR. CASH $ 1785

MAR .5 DR CASH $ 2640

CR GOODS $ $ 1680

CR PROFIT ON GOODS $ 960

MAR .11 DR GOODS $ 3034

CR CASH $ 3034

MAR .20 DR GOODS $ 2080

CR CASH $ 2080

MAR .30 DR CASH $ 6875

CR GOODS $4226

CR PROFIT ON GOODS $ 2649

CLOSING ENTRY WILL NOT BE PASSED