 Ask Remember Me? fefe4014 Posts: 3, Reputation: 1 New Member #1 Mar 26, 2008, 03:24 PM
Find Cost of goods sold and ending inventory using.average cost/FIFO/LIFO
I'm having a hard time with the fifo and lifo method... of this question

Began with 73 yards @ 23 per yard During the month the company made the following purchases.

March
3/4 113 yards @ 27
3/12 81 yards @ 29
3/19 167 yards @ 32
3/25 44 yards @ 35

Sold 418 yards; the ending inventory consists of 60 yards and the sale price was 60 per yard.

Find Cost of goods sold and ending inventory using
1. average cost
2. FIFO
3. LIFO

And How could I prepare an income statement for march...
Thanks :) CaptainForest Posts: 3,645, Reputation: 393 Ultra Member #2 Mar 26, 2008, 06:36 PM
So I take it yards is just a unit.

FIFOFirst In First Out.what we buy first, we assume we SELL first.

So,
Opening Inventory 73 units at 23

Now it doesn't tell you WHEN you made the sales. That is OK. We will assume March 26.

So you sold 418, so we assume that means you sold the beginning inventory, plus the purchases on March 4 and 12 and some of the March 19.

The 60 units, we assume they are 44 at 35 and 16 at 32.
Therefore, the COGS would be:
73 at 23
113 at 27
81 at 29
(167-16) at 32

LIFO. The opposite. 60 ending inventory would be the first 60 (so 60 at 23). The rest would be COGS

Average Cost.you would take an average

So do 73 at 23 = 1,679
Etc

Then take the total money, divide by total units to get cost/unit

Then multiply that rate by 60 for ending inventory and by 418 for COGS CaptainForest Posts: 3,645, Reputation: 393 Ultra Member #3 Mar 26, 2008, 10:20 PM
Opening Inventory 73 at 23 = 1,679

Purchases:
3/4 113 yards @ 27 = 3,051
3/12 81 yards @ 29 = 2,349
3/19 167 yards @ 32 = 5,344
3/25 44 yards @ 35 = 1,540

Sold 418
Ending Inventory 60

FIFO Method
COGS = 1,679 + 3,051 + 2,349 + (151*32=4,832) = 11,911

LIFO Method
COGS = 1,540 + 5,344 + 2,349 + 3,051 + (13*23=299) = 12,583

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