Question

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method perpetually at the time of each sale, as if it uses perpetual inventory system. Assume Oahu Kiki’s records show the following for the month of January. The company sold 330 units between January 16 and 23.

Date     Units Unit Cost Total Cost
  Beginning Inventory January 1 300 $ 90 $ 27,000
  Purchase January 15 400 100 40,000
  Purchase January 24 300 120 36,000

Required:

FIFO and LIFO

Cost of ending Inventory-

Cost of goods sold-

Answer 1

FIFO:

Cost of Goods available for sale = 300 * $90 + 400 * $100 + 300 * $120
Cost of Goods available for sale = $103,000

Number of units sold = 330

Cost of Goods Sold = 300 * $90 + 30 * $100
Cost of Goods Sold = $30,000

Cost of Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Cost of Ending Inventory = $103,000 - $30,000
Cost of Ending Inventory = $73,000

LIFO:

Cost of Goods available for sale = 300 * $90 + 400 * $100 + 300 * $120
Cost of Goods available for sale = $103,000

Number of units sold = 330

Cost of Goods Sold = 330 * $100
Cost of Goods Sold = $33,000

Cost of Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Cost of Ending Inventory = $103,000 - $33,000
Cost of Ending Inventory = $70,000