July 1 Beginning inventory, 1,000 units at $2 each 5 Purchased 2,000 units at $2
ID: 2459094 • Letter: J
Question
July 1 Beginning inventory, 1,000 units at $2 each 5 Purchased 2,000 units at $2.75 each 10 Sold 2,500 units 15 Purchased 2,000 units at $4 each 25 Sold 1,500 units Calculate cost of goods sold for July assuming FIFO is used under a perpetual inventory system. Calculate ending inventory on July 31^st assuming LIFO is used under a perpetual inventory system. Calculate ending inventory on July 31^st assuming FIFO is used under a periodic inventory system. Calculate cost of goods sold for July assuming LIFO is used under a periodic inventory system.Explanation / Answer
1)Cost of Goods sold in July under FIFO method
Sales made on July 10 are made out of Beginning Inventory (1000 Units) + 1500 units from July 5 Purchases
Sales made on July-25 are made out July-5 Purchases (500 Units) + 1000 units from July-15 Purchases
Therefore, Ending Inventory under FIFO method = 1000 units from July-15 Purchases
..
Therefore, Cost of Goods sold in July under FIFO method = [1000*2 + 1500*2.75] + [500*2.75 + 1000*4]
= $11,500 ...(Ans for Part-1)
Ending Inventory under FIFO method = 1000*4
=$4,000 ....(Ans for Part-3)
..
2)Ending Inventory as on 31st July under LIFO method
Sales made on July 10 are made out of Purchases made on July - 5 (2,000 units) + 500 units from beginning inventory
Sales made on July -25 are made out of Purchases made on July -15 (1500 units)
Therefore , Ending Inventory under LIFO method = 500 units from Beginning Inventory + 500 units from July-15 Purchases
..
Ending Inventory under LIFO method = 500*2 + 500*4
= $3,000 .....(Ans for Part-2)
Cost of Goods sold under LIFO method = [(2000*2.75) + 500*2] + [1500*4]
= $12,500 .....(Ans for part-4)
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