Question

FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 22 units @ $45 Sale 10 units @ $70 First purchase 31 units @ $46 Sale 23 units @ $72 Second purchase 26 units @ $48 Sale 22 units @ $74 The firm uses the perpetual inventory system, and there are 24 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? $ b. What is the total cost of the ending inventory according to LIFO?

Answer 1

(a)- Total cost of the ending inventory according to FIFO

Inventory Schedule
FIFO (First in first out) Method
	Goods Purchased			Cost of goods sold			Inventory Balance
	# of Units	Cost per unit	Total Cost ($)	# of Units	Cost per unit	Cost of goods sold ($)	# of Units	Cost per unit	Inventory Balance ($)
Beginning	22	45	990				22	45	990
				10	45	450	12	45	540
First	31	46	1,426				12	45	540
							31	46	1,426
				12	45	540	20	46	920
				11	46	506
Second	26	48	1,248				20	46	920
							26	48	1,248
				20	46	920	24	48	1,152
				2	48	96
TOTAL						2,512	24		1,152

“The total cost of the ending inventory according to FIFO = $1,152”

(b)- Total cost of the ending inventory according to LIFO

Inventory Schedule
LIFO (Last in first out) Method
	Goods Purchased			Cost of goods sold			Inventory Balance
	# of Units	Cost per unit	Total Cost ($)	# of Units	Cost per unit	Cost of goods sold ($)	# of Units	Cost per unit	Inventory Balance ($)
Beginning	22	45	990				22	45	990
				10	45	450	12	45	540
First	31	46	1,426				12	45	540
							31	46	1,426
				23	46	1,058	12	45	540
							8	46	368
Second	26	48	1,248				12	45	540
							8	46	368
							26	48	1,248
				22	48	-26	12	45	540
							8	46	368
							4	48	192
TOTAL						1,482	24		1,100

“The total cost of the ending inventory according to LIFO = $1,100”