LoBianco Company\'s record of transactions for the month of April was as follows

Question

LoBianco Company's record of transactions for the month of April was as follows.


Purchases

Sales

(a) Assuming that periodic inventory records are kept in units only, compute the inventory at April 30 using (1) LIFO and (2) average cost.



LIFO $
Average Cost $


(b) Assuming that perpetual inventory records are kept in dollars, determine the inventory using (1) FIFO and (2) LIFO.



FIFO $
LIFO $


(c) Compute cost of goods sold assuming periodic inventory procedures and inventory priced at FIFO.



Cost of goods sold $


(d) In an inflationary period, which inventory method

April 1 (balance on hand) 870 @ $5.0 April 3 725 @ $9 4 2,175 @ 5.1 9 1,885 @ 9 8 1,160 @ 5.3 11 870 @ 11 13 1,740 @ 5.4 23 1,740 @ 11 21 1,015 @ 5.7 27 1,305 @ 13 29 725 @ 6.1 6,525 7,685

Explanation / Answer

Purchase total 5300 units
Sales total 4500 units

FIFO is simple. Whether it's periodic or perpetual, the ending inventory will consist of the newest purchases for the month. There are 800 (5,300 - 4,500) units left in inventory. So ending FIFO inventory is:

500 @ 6.79 + 300 @ 6.60 = 5,375

LIFO is a little more complicated. The ending inventory will depend on when the purchases and sales fall during the month. Using the combined schedule of purchases and sale, you can see how it works.

Purchase 1 600@6.00
Sales 3 500@10.00 (100 units remain @ 6.00 each)
Purchase 4 1500@6.08
Purchase 8 800@6.40
Sales 9 1300@10.00 (800 were sold from Apr 8 purchase and 500 from Apr 4 purchase. This leaves 1,000 from Apr 4 @ 6.08 plus 100 @ 6.00 from Apr 1)
Sales 11 600@11.00 (This would also come from the Apr 4 purchase, leaving 400 @ 6.08 from Apr 4 and 100 @ 6.00 from Apr 1)
Purchase 13 1200@6.50
Purchase 21 700@6.60
Sales 23 1200 @ 11.00 (700 would come from the Apr 21 purchase, and 500 would come from the Apr 13 purchase. Leaving 700 @ 6.50 from Apr 13, 400 @ 6.08 from Apr 4, and 100 @ 6.00 from Apr 1)
Sales 27 900@12.00 (700 would come from the Apr 13 purchase, and 200 would come from the Apr 4 purchases, leaving 200 @ 6.08 from Apr 4 and 100 @ 6.00 from Apr 1
Purchase 29 500@6.79

So LIFO ending inventory would be calculated as:
100 @ 6.00 + 200 @ 6.08 + 500 @ 6.79 = $5,211

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