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When using the fifo or lifo method to compute cost of goods sold and ending inventory, how do you determine what goes in the ending inventory column and what goes into the cogs column.
Example:
Opening Inv. 9,000 units@ $16
Purchase 4/16: 27,000 units @ $18
Purchase 7/28: 30,000 units @ $23
How would that be split to get the EI and the COGS?
Cogs is the cost of the goods sold. Ending Inventory is the number of units left after after the goods have been picked out and sold.Quote:
Originally Posted by vnalezny
Inventory Beginning
+ Purchases of Inventory
=Inventory available for sale
-Ending Inventory
=COGS
Under FIFO, the inventory in first goes out the door first.
Under LIFO, the inventory purchased last goes out the door first.
Under FIFO the first units out would start with the 9,000 listed above, and then follow with the purchases of units. Under LIFO the first units sold would begin with the bottom 30,000 units and go up from there. You can't figure out the ending inventory if you don't know what units were sold. However, this the formula to use no matter what method is used.
Beginning Inventory $ 144,000
+Purchases of Inv. 1,176,000
=Goods Available for Sale 1,320,000
-Ending Inventory This is the amount that is left after goods were sold.
=COGS This is the cost of the goods sold.
April 1 inventory balance 120 units @ 8.04 each
April 10 purchase 200 units @ 8.20 each
April 20 purchase 410 units @ 8.40 each
April 22 sale 630 units @ 15.00 each
April 25 purchase 310 units @ 8.59 each
how do I compute the value of ending inventory under LIFO? And how do I compute the value of ending inventory under FIFO? And, which inventory costing method results in the largest cost of goods sold
please help I'm so lost!
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