P8-5 (L03) (Compute FIFO, LIFO, and Average-Cost) Some of the information found

Question

P8-5 (L03) (Compute FIFO, LIFO, and Average-Cost) Some of the information found on a detail inventory card for Slatkin for the first month of operations is as follows. Received No of Units Unit Cost No of Units No. of Units January 2 1,200 $3.00 1,200 10 13 3.20 1,100 600 1,100 23 26 1,300 3.40 1,500 1,600 3.50 2,300 1,000 31 Instructions a) From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. (Carry unit costs to the nearest cent and ending inventory to the nearest dollar.) 1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO) (3) Average-cost (b) If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1),(2), and (3) above be the same? Explain and compute. (Round average unit costs to four decimal places.)

Explanation / Answer

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B) If the inventory record kept in dollars and cost are computed at the time of each withdrawal, the amount shown ending balance will not change beacause the per unit cost is affecting only the withdrawal and not the closing inventory at each date. Inventory value was arrived from the previous date closing inventory and the fresh purchases so the change issue price will not affect the closing inventory price.

1)FIFO Date Description Units Unit cost Total Jan 2 Receipt 1200 3.00 3600 Jan 7 Issue 700 3.00 2100 Jan 7 Available inventory 500 3.00 1500 Jan 10 Receipt 600 3.20 1920 Jan 10 Available inventory 500 3.00 1500 600 3.20 1920 Jan 13 Issue 500 3.00 1500 Jan 13 Available inventory 600 3.20 1920 Jan 18 Receipt 1000 3.30 3300 Jan 18 Issue 300 3.20 960 Jan 18 Available inventory 300 3.20 960 1000 3.30 3300 Jan 20 Issue 300 3.20 960 800 3.30 2640 Jan 20 Available inventory 200 3.30 660 Jan 23 Receipt 1300 3.40 4420 Jan 23 Available inventory 200 3.30 660 1300 3.40 4420 Jan 26 Issue 200 3.30 660 600 3.40 2040 Jan 26 Available inventory 700 3.40 2380 Jan 28 Receipt 1600 3.50 5600 Jan 28 Available inventory 700 3.40 2380 1600 3.50 5600 Jan 31 Issue 700 3.40 2380 600 3.50 2100 Jan 31 Available inventory 1000 3.50 3500 Jan 31 Closing Inventory as on 31st Jan 1000 3.50 3500 2)LIFO Date Description Units Unit cost Total Jan 2 Receipt 1200 3.00 3600 Jan 7 Issue 700 3.00 2100 Jan 7 Available inventory 500 3.00 1500 Jan 10 Receipt 600 3.20 1920 Jan 10 Available inventory 500 3.00 1500 600 3.20 1920 Jan 13 Issue 500 3.20 1600 Jan 13 Available inventory 100 3.00 300 500 3.20 1600 Jan 18 Receipt 1000 3.30 3300 Jan 18 Issue 300 3.30 990 Jan 18 Available inventory 100 3.00 300 500 3.20 1600 700 3.30 2310 Jan 20 Issue 700 3.30 2310 400 3.20 1280 Jan 20 Available inventory 100 3.00 300 100 3.20 320 Jan 23 Receipt 1300 3.40 4420 Jan 23 Available inventory 100 3.00 300 100 3.20 320 1300 3.40 4420 Jan 26 Issue 800 3.40 2720 Jan 26 Available inventory 100 3.00 300 100 3.40 340 500 3.40 1700 Jan 28 Receipt 1600 3.50 5600 Jan 28 Available inventory 100 3.00 300 100 3.40 340 500 3.40 1700 1600 3.50 5600 Jan 31 Issue 1300 3.50 4550 Jan 31 Available inventory 100 3.00 300 100 3.40 340 500 3.40 1700 300 3.50 1050 Jan 31 Closing Inventory as on 31st Jan 1000 3390 3)Average Cost Date Description Units Unit cost Total Jan 2 Receipt 1200 3.00 3600 Jan 7 Issue 700 3.00 2100 Jan 7 Available inventory 500 3.00 1500 Jan 10 Receipt 600 3.20 1920 Jan 10 Available inventory 1100 3.11 3421 Jan 13 Issue 500 3.11 1555 Jan 13 Available inventory 600 3.11 1866 Jan 18 Receipt 1000 3.30 3300 Jan 18 Issue 300 3.23 969 Jan 18 Available inventory 1300 3.23 4199 Jan 20 Issue 1100 3.23 3553 Jan 20 Available inventory 200 3.23 646 Jan 23 Receipt 1300 3.40 4420 Jan 23 Available inventory 1500 3.38 5070 Jan 26 Issue 800 3.38 2704 Jan 26 Available inventory 700 3.38 2366 Jan 28 Receipt 1600 3.50 5600 Jan 28 Available inventory 2300 3.46 7958 Jan 31 Issue 1300 3.46 4498 Jan 31 Available inventory 1000 3.46 3460 Jan 31 Closing Inventory as on 31st Jan 1000 3.46

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