e form illustrated in Exhibit 4 EX 7-7 FIFO and LIFO costs under perpetual inven
ID: 2400904 • Letter: E
Question
e form illustrated in Exhibit 4 EX 7-7 FIFO and LIFO costs under perpetual inventory system The following units of an item were available for sale during the year: OBJ. 2, 3 0 Beginning inventory Sale First purchase Sale Second purchase Sale 3,600 units at $4.00 2,400 units at $8.00 8,000 units at $4.20 6,000 units at $8.00 7,500 units at $4.40 5,500 units at $8.00 The firm uses the perpetual inventory system, and there are 5,200 units of the item on hand at the end of the y (a) FIFO, (b) LIFO? ear. What is the total cost of the ending inventory according to EX 7-8 Weighted average cost flow method under perpetual inventory system o8J.3 or cate suringgthe calenclar ear Solowing units of a particular item were available for sateExplanation / Answer
1. FIFO METHOD
As per FIFO method , sales were first made out of inventory which was purchased at the earliest and then sales will be made out of the inventory which was purchased later
1200 $4 $4,800
8000 $4.2 $33,600
3200 $4.2 $13,440
7500 $4.4 $33,000
Here 5,200 units remaining at the end of the year were out of the second purchase of 7,500 units
hence cost of ending inventory = 5,200 units*$4.40 = $22,880
2. LIFO METHOD
As per LIFO method, sales were first made out of the purchases made later and then out of the purchases made earlier
1200 $4 $4,800
8000 $4.2 $33,600
1200 $4 $4,800
2000 $4.2 $8,400
1200 $4 $4,800
2000 $4.2 $8,400
7500 $4.4 $33,000
1200 $4 $4,800
2000 $4.2 $8,400
2000 $4.4 $8,800
.
hence cost of ending inventory =$4,800+$8,400+$8,800 = $22,000
OPENING INVENTORY PURCHASES SALES BALANCE UNITS COST TOTAL COST UNITS COST TOTAL COST UNITS COST TOTAL COST UNITS COST TOTAL COST 3600 $4 $14,400 3600 $4 $14,400 2400 $8 $19,200 1200 $4 $4,800 8000 $4.2 $33,6001200 $4 $4,800
8000 $4.2 $33,600
6000 $8 $48,000 3200 $4.2 $13,440 7500 $4.4 $33,0003200 $4.2 $13,440
7500 $4.4 $33,000
5500 $8 $44,000 5200 $4.4 $22,880Related Questions
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