Esplanade Company was formed December 1, 2009. The following information is avai

Question

Esplanade Company was formed December 1, 2009. The following information is available from Esplanade's inventory records for Product BAP.

January 1, 2010 (Beginning inventory): 600 units, unit cost $8.00
Purchases:
January 5, 2010: 1100 units, unit cost 9.00
January 25, 2010: 1300 units, unit cost 10.00
February 16, 2010: 800 units, unit cost 11.00
March 26, 2010: 600 units, unit cost 12.00

A physical inventory on March 31, 2010 shows 1500 units on hand.

Instructions:
Prepare scheudles to compute the ending inventory at March 31,2010, under each of the following inventory methods: (a) FIFO. (b) LIFO.

Explanation / Answer

Esplanade Company was formed December 1, 2009. The following information is available from Esplanade's inventory records for Product BAP.
FIFO.
January 1, 2010 (Beginning inventory): 600 units, unit cost $8.00
Purchases:
January 5, 2010: 1100 units, unit cost 9.00
January 25, 2010: 1300 units, unit cost 10.00
February 16, 2010: 800 units, unit cost 11.00
March 26, 2010: 600 units, unit cost 12.00

LIFO :

FIFO:

1100x $8.00 + 400x $9.00 = $12,

3/26/10

600x$8 + 1100x $9 + 1300x $10 = $43,700.

=: 43700-12900 =30,800          

For LIFO:

ending inventory = 43700 - 17000 =26700    

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