Westcoast Purveyors had 316 computer system in stock at the end of the year. Inventory records show the following information: Date Qty Cost Total Cost January 1 Beginning Inventory 50 $1,468 $73,400 June 21 Purchase 50 1,192 59,600 August 1 Purchase 300 884 265,200 October 23 Purchase 200 1,216 243,200 November 16 Purchase 100 1,424 142,400 Total available for sale 700 $775,800 Using the LIFO method of inventory pricing, calculate the dollar value of the ending inventory.
Westcoast Purveyors had 316 computer system in stock at the end of the year. Inventory records show the following information: Date Qty Cost Total Cost January 1 Beginning Inventory 50 $1,468 $73,400 June 21 Purchase 50 1,192 59,600 August 1 Purchase 300 884 265,200 October 23 Purchase 200 1,216 243,200 November 16 Purchase 100 1,424 142,400 Total available for sale 700 $775,800 Using the LIFO method of inventory pricing, calculate the dollar value of the ending inventory.
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 67P
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Westcoast Purveyors had 316 computer system in stock at the end of the year. Inventory records show the following information:
Date | Qty | Cost | Total Cost | |
---|---|---|---|---|
January 1 | Beginning Inventory | 50 | $1,468 | $73,400 |
June 21 | Purchase | 50 | 1,192 | 59,600 |
August 1 | Purchase | 300 | 884 | 265,200 |
October 23 | Purchase | 200 | 1,216 | 243,200 |
November 16 | Purchase | 100 | 1,424 | 142,400 |
Total available for sale | 700 | $775,800 |
Using the LIFO method of inventory pricing, calculate the dollar value of the ending inventory.
Step 1
The last-in, first-out (LIFO) method assumes that the items purchased last are sold or removed from inventory first. The items in inventory at the end of the year are matched with the cost of items of the same type that were purchased earliest. Therefore, items included in the ending inventory are considered to be those from the beginning inventory plus those acquired first from purchases. This method involves taking physical inventory at the end of the year or accounting period and assigning cost in the same order in which the purchases were received. The annual inventory is given below.
Date | Qty | Cost | Total Cost | |
---|---|---|---|---|
January 1 | Beginning Inventory | 50 | $1,468 | $73,400 |
June 21 | Purchase | 50 | 1,192 | 59,600 |
August 1 | Purchase | 300 | 884 | 265,200 |
October 23 | Purchase | 200 | 1,216 | 243,200 |
November 16 | Purchase | 100 | 1,424 | 142,400 |
Total available for sale | 700 | $775,800 |
There are 316 computer systems in stock at the end of the year. There were 50 systems on January 1, and 50 more systems acquired on June 21 for a total of
50 + 50 = 100
systems. This is less than the 316 computer systems in the inventory at the end of the year. We are concerned about
316 − 100 = computer systems
that have not yet been accounted for, so we will consider the acquisition on August 1.There were 300 computer systems acquired on August 1. This is the number of computer systems that have not yet been accounted for. Therefore, the ending inventory of 316 computer systems is made up of all the computer systems acquired in January and June, and that were acquired on August 1.
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