During September, the following changes in inventory item A20 took place: Sept 1

Question

  During September, the following changes in inventory item A20 took place:

            Sept   1     Balance                         1,400 units @ $24

                    14     Purchased                        800 units @ $36

                    24     Purchased                        600 units @ $30

                      8     Sold                                  400 units @ $50

                    10     Sold                               1,000 units @ $40

                    29     Sold                                  500 units @ $44

Perpetual inventories are maintained.

What is the cost of the ending inventory for item A20 under the following methods:

(a) FIFO

(b) LIFO

Explanation / Answer

Answer:

Inventory on FIFO Basis Purchase Sales Balance Date Qty Rate Amount $ Qty Rate Amount $ Qty Rate Amount $ 1-Sep 1400 24          33,600 0 0                               -   1400 24          33,600 8-Sep 0 0                   -   400 50                      20,000 1000 24          24,000 10-Sep 0 0                   -   1000 40                      40,000 0 0                   -   14-Sep 800 36          28,800 0 0                               -   800 36          28,800 24-Sep 600 30          18,000 800 36          28,800 600 30          18,000 29-Sep 0 0                   -   500 44                      22,000 300 36          10,800 600 30          18,000 Qty Rate Amount $ Ending Inventory 900          28,800

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