Alta Ski Company\'s inventory records contained the following information regard

Question

Alta Ski Company's inventory records contained the following information regarding its latest ski model. The company uses a periodic inventory system.

   

Compute cost of goods sold for January and the ending inventory using both the FIFO and LIFO methods.

  Beginning inventory, January 1, 2013 1,350 units @ $ 100 each   Purchases:      January 15 2,800 units @ $ 115 each      January 21 2,600 units @ $ 120 each   Sales:      January 5 1,300 units @ $ 140 each      January 22 1,700 units @ $ 150 each      January 29 1,150 units @ $ 155 each   Ending inventory, January 31, 2013 2,600 units

Explanation / Answer

Valuation of Inventory by FIFO Method Date Purchase Issued Balance Inventory Units Price Per Unit(in $) Value Unit Price Per Unit(in $) Value Unit Price Per Unit(in $) Value 01.01.2013 1350 100 135000 05.01.2013 1300 100 130000 50 100 5000 15.01.2013 2800 115 322000 2800 115 322000 21.01.2013 2600 120 312000 2600 120 312000 22.01.2013 50 100 5000 1650 115 189750 1150 115 132250 2600 120 312000 29.01.2013 1150 115 132250 2600 120 312000 Calculation of cost of good sold Unit Available for sale =1350+2800+2600=6750 Unit Sold                         = 1300+1700+900+250=4150 Unit in ending Inventory= 6750-4150=2600 Cost of Good Sold Unit Cost Total Sold from 01.01.13 ut 1350 100 135000 Sold from 15.01.13 ut 2800 115 322000 Total 457000 Valuation of Inventory by LIFO Method Date Purchase Issued Balance Inventory Units Price Per Unit(in $) Value Unit Price Per Unit(in $) Value Unit Price Per Unit(in $) Value 01.01.2013 1350 100 135000 05.01.2013 1300 100 130000 50 100 5000 15.01.2013 2800 115 322000 2800 115 322000 21.01.2013 2600 120 312000 2600 120 312000 22.01.2013 1700 120 204000 50 100 5000 2800 115 322000 900 120 108000 29.01.2013 900 120 108000 50 100 5000 250 115 28750 2550 115 293250 Calculation of cost of good sold Unit Available for sale =1350+2800+2600=6750 Unit Sold                         = 1300+1700+900+250=4150 Unit in ending Inventory= 6750-4150=2600 Cost of Good Sold Unit Cost Total Sale from 21.01.2013 2600 120 312000 Sale from 15.01.2013 250 115 28750 Sale from 01.01.2013 1300 100 130000 Total 470750 Cost of goods sold is lower in FIFO method instead of LIFO METHOD Inventory is also higher in FIFO Method

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