Chapter 6, Problem 6.4.2P

Inventory by three cost flow methods

Details regarding the inventory of appliances on January 1, 20Y7, purchases invoices during the year, and the inventory count on December 31. 2O’7. of Amsterdam Appliances are summarized as follows:

Instructions
Determine the Cost of the inventory on December 31, 20Y7, by the last-in. first-out method, following the procedures indicated in (1).

To determine

Concept Introduction:

Periodic Inventory System:

The periodic inventory system records and updates the inventory at the end of a particular period. The inventory balance is not updated after each transaction and it is updated periodically.

LIFO method:

LIFO Stands for Last in First Out. Under this method, the latest units purchased are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the oldest units purchased.

The Cost of the ending inventory for each Model using LIFO

Answer to Problem 6.4.2P

The Cost of the ending inventory for each Model using LIFO is as follows:

Model	Quantity	Unit Cost	Total Cost
A10	4	$ 64	$ 256
	2	$ 70	$ 140
			$ 396
B15	8	$ 176	$ 1,408
E60	3	$ 75	$ 225
	2	$ 65	$ 130
			$ 355
G83	7	$ 242	$ 1,694
	2	$ 250	$ 500
			$ 2,194
J34	12	$ 240	$ 2,880
	3	$ 246	$ 738
			$ 3,618
M90	20	$ 108	$ 2,160
	2	$ 110	$ 220
	1	$ 128	$ 128
			$ 2,508
Q70	5	$ 160	$ 800
	3	$ 170	$ 510
			$ 1,310

Explanation of Solution

The Cost of the ending inventory for each Model using FIFO is calculated as follows:

Model	Quantity	Unit Cost	Total Cost
A10	4	$ 64	$ 256
	2	$ 70	$ 140
			$ 396
B15	8	$ 176	$ 1,408
E60	3	$ 75	$ 225
	2	$ 65	$ 130
			$ 355
G83	7	$ 242	$ 1,694
	2	$ 250	$ 500
			$ 2,194
J34	12	$ 240	$ 2,880
	3	$ 246	$ 738
			$ 3,618
M90	20	$ 108	$ 2,160
	2	$ 110	$ 220
	1	$ 128	$ 128
			$ 2,508
Q70	5	$ 160	$ 800
	3	$ 170	$ 510
			$ 1,310