
EXPERT ANSWER
a) Ending inventory at September 30 = Total units available – Units sold = 144 – 121 = 23 units
Ending inventory:
FIFO = 23 X $112 = $2576
LIFO = 23 x $100 = $2300
Cost of good sold:
FIFO = $15510 – $2576 = $12934
LIFO = $15510 – $2300 = $13210
Cost of goods sold: FIFO | |||
Units | Unit Cost $ | Total Cost $ | |
Sept. 1 | 25 | 100 | 2500 |
Sept. 12 | 45 | 106 | 4770 |
Sept. 19 | 24 | 110 | 2640 |
Sept. 26 | 27 | 112 | 3024 |
Total | 121 | 12934 |
Cost of goods sold: LIFO | |||
Units | Unit Cost $ | Total Cost $ | |
Sept. 1 | 2 | 100 | 200 |
Sept. 12 | 45 | 106 | 4770 |
Sept. 19 | 24 | 110 | 2640 |
Sept. 26 | 50 | 112 | 5600 |
Total | 121 | 13210 |
b)
FIFO | LIFO | |
Ending inventory | 2576 | 2300 |
Cost of goods sold | 12934 | 13210 |
Total $ | 15510 | 15510 |
The sum of the ending inventory and cost of goods sold under both the methods is the same which is cost of the goods available for sale.
c)
FIFO | LIFO | |
Sales (121 x $170) | 20570 | 20570 |
Cost of goods sold | 12934 | 13210 |
Gross profit $ | 7636 | 7360 |
d) The FIFO method results in a larger amount reported for assets on the balance sheet and a larger amount reported for stockholders’ equity on the balance sheet