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Yoseff Company uses the LIFO method of inventory valuation. For Year 5, cost of goods sold...

Yoseff Company uses the LIFO method of inventory valuation. For Year 5, cost of goods sold was $45,000. Beginning inventory was $5,000 and ending inventory was $6,000. If Yoseff had used the FIFO method of inventory valuation, beginning inventory would have been $8,000 and ending inventory would have been $11,000. What would Yoseff’s cost of goods sold in Year 5 have been if Yoseff had used FIFO?

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Answer #1

LIFO method

Cost of goods sold = $45,000

Beginning inventory = $5,000

Ending inventory = $6,000

Purchases = Cost of goods sold + Ending inventory - Beginning inventory

= 45,000 + 6,000 - 5,000

= $46,000

FIFO Method

Purchases = $46,000

Beginning inventory = $8,000

Ending inventory = $11,000

Cost of goods sold = Beginning inventory + Purchases - Ending inventory

= 8,000 + 46,000 - 11,000

= $43,000

Cost of Goods in years 5 if FIFO method is used = $43,000

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