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FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 31 units at $47 Sale 27 units at $68

FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 31 units at $47 Sale 27 units at $68

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ACC 20... 8 LGBT. eBook Show Me How FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 31 units at $47 Sale 27 units at $68 First purchase 26 units at $50 Sale 24 units at $70 Second purchase 26 units at $51 Sale 17 units at $71 The firm uses the perpetual inventory system, and there are 15 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? X b. What is the total cost of the ending inventory according to LIFO? Feedback Check My Work a. Note that this exercise uses the perpetual inventory system. FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, e the most recent purchases. Think of your inventory in terms of "layers". The first sale comes from the oldest layer - beginning inventory. Is the remaining amc inventory layer enough to satisfy the second sale? If not, the remaining amount of units sold should be taken from the first purchase layer. Any remainder fro be considered as the oldest goods to be used for the second sale. If the remainder from the first purchase is not enough to satisfy the third sale, then cost of from the second purchase. The remaining units from the second purchase make up the ending inventory. b. Note that this exercise uses the perpetual inventory system. When the perpetual inventory system is used, revenue is recorded each time a sale is made a the cost of the merchandise sold. LIFO means the last units purchased are assumed to be the first to be cold. Theref the first purohe C Compre...
Transcribed Image Text:ACC 20... 8 LGBT. eBook Show Me How FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 31 units at $47 Sale 27 units at $68 First purchase 26 units at $50 Sale 24 units at $70 Second purchase 26 units at $51 Sale 17 units at $71 The firm uses the perpetual inventory system, and there are 15 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? X b. What is the total cost of the ending inventory according to LIFO? Feedback Check My Work a. Note that this exercise uses the perpetual inventory system. FIFO means that the first units purchased are assumed to be the first to be sold. Therefore, e the most recent purchases. Think of your inventory in terms of "layers". The first sale comes from the oldest layer - beginning inventory. Is the remaining amc inventory layer enough to satisfy the second sale? If not, the remaining amount of units sold should be taken from the first purchase layer. Any remainder fro be considered as the oldest goods to be used for the second sale. If the remainder from the first purchase is not enough to satisfy the third sale, then cost of from the second purchase. The remaining units from the second purchase make up the ending inventory. b. Note that this exercise uses the perpetual inventory system. When the perpetual inventory system is used, revenue is recorded each time a sale is made a the cost of the merchandise sold. LIFO means the last units purchased are assumed to be the first to be cold. Theref the first purohe C Compre...
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