1/1... Beginning Inventory... 1,000... $12
2/4... Purchase... 2,000... $18
2/20... Sale... 2,500... $30
4/2... Purchase... 3,000... $23
11/4... Sale... 2,000... $33

How do I compute cost of goods sold using LIFO under the perpetual inventory system?

under lifo inventory, it assumed the first purchases should be sold first.

... unit... unit cost... cost balance

beginning inventory 1000 $12 $12000 12000
purchase 2000 $18 36000 48000
sale (2500) - (39000) 9000
purchase 3000 23 69000 78000
sale 2000 - (43500) 34500

ending inventory: 34500

shotcut approach:

beginning inv: 1000
total purchases 5000
units available: 6000
less: sales 4500
unsold units 1500

cost of unsold units: (1500*23) = 34500

cost of goods sold:
beg inv. (1000*12) 12000
2/4 (2000*18) 36000
4/2 (1500*23) 34500
cost of goods sold: 82500

under lifo inventory, it assumed the first purchases should be sold first.

... unit.. . unit cost... cost... balance

beginning inventory... 1000... $12... $12000... 12000
purchase... 2000... $18... 36000... 48000
sale... (2500)... -... (39000)... 9000
purchase... 3000... 23... 69000... 78000
sale... (2000)... -... (43500)... 34500

ending inventory: 34500

shotcut approach:

beginning inv:... 1000
total purchases... 5000
units available:... 6000
less: sales... 4500
unsold units... 1500

cost of unsold units: (1500*23) = 34500

cost of goods sold:
beg inv (1000*12)... 12000
2/4 (2000*18)... 36000
4/2 (1500*23)... 34500
cost of goods sold:... 82500

Hi there Daisy,

I will try to make this short and sweat.

LIFO means that you SELL the goods you received LAST, first.

On 2/20, you sold 2,500 units. Therefore, you sold them at 2/4 price of 2,000 x 18 and 500 units from 1/1 at 12.

COGS from the 2/20 sale = 2,000 x 18 + 500 x 12 = 36,000 + 6,000 = $42,000

11/4 Sale of 2,000 units.
We assume you sold 2,000 of the 3,000 of items purchased on 4/2 at 23

COGS from the 11/4 sale = 2,000 x 23 = $46,000

Total COGS for the year = 42,000 + 46,000 = $88,000

Also note that Perpetual Inventory means that you calculate COGS after EVERY sale. If it was Periodic Inventory, you would only calculate the COGS at the end of the year/accounting period.