Question

The following data regarding purchases and sales of a commodity were taken from the related perpetual inventory account:

June 1		Balance	25 units at $60
6		Sale	20 units
8		Purchase	20 units at $61
16		Sale	10 units
20		Purchase	20 units at $62
23		Sale	25 units
30		Purchase	15 units at $63

Calculate the cost of the ending inventory at June 30, using (a) the first-in, first-out (FIFO) method and (b) the last-in, first-out (LIFO) method. Identify the quantity, unit price, and total cost of each lot in the inventory.

(a) First-In, First-Out (FIFO):

	units at	$	$
	units at	$
Total			$

(b) Last-In, First-Out (LIFO):

	units at	$	$
	units at	$
	units at	$
Total			$

Answer 1

Determine the cost of the inventory balance at June 30

(a) the first-in, first-out method

June 1 Balance 25 Units at $60
6 Sale 20 Units (COGS 20 x $60 = $1200)
Bal. inventory 5 units at $60
8 Purchase 20 units at $61
16 Sale 10 Units (COGS 5 units x $60 + 5 units x $61 = $605)
Bal. inventory 15 units at $61
20 Purchase 20 Units at $62
23 Sale 25 Units (COGS 15 units x $61 + 10 units at $62 = $1535)
Bal. inventory 10 units at $62
30 Purchase 15 Units at $63
Bal. inventory 10 units at $62 + 15 units x $63 = $1007 at June 31

(b) the last-in, first-out method

June 1 Balance 25 Units at $60
6 Sale 20 Units (COGS 20 x $60 = $1200)
Bal. inventory 5 units at $60
8 Purchase 20 units at $61
16 Sale 10 Units (COGS 10 units x $61 = $610)
Bal. inventory 5 units at $60 + 10 units at $61
20 Purchase 20 Units at $62
23 Sale 25 Units (COGS 20 units x $62 + 5 units at $61 = $1545)
Bal. inventory 5 units at $60
30 Purchase 15 Units at $63
Bal. inventory 5 units at $60 + 5 units at $61 + 15 units at $63 = $1550 at June 30