The inventory records of Kuffel Co. reflected the following information for the
ID: 2349918 • Letter: T
Question
The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010:Date-Transaction-Units-Units cost-Total cost
1/1-Beginning Inventory-150-$32-$4800
2/22-Purchase-70-$33-$2310
3/7-Sale-(100)---
4/15-Purchase-90-$38-$3420
6/11-Purchase-140-$36-$5040
7/28-Sale-(100)--
10/13-Purchase-50-$39-$1950
12/4-Sale-(100)--
(a) Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of goods sold and ending inventory under FIFO and LIFO.
Cost of goods sold FIFO & LIFO
Ending Inventory FIFO & LIFO
(b) Assume that Kuffel Co. uses a perpetual inventory system. Calculate cost of goods sold and ending inventory under FIFO and LIFO.
Cost of goods sold FIFO & LIFO
Ending Inventory FIFO & LIFO
Explanation / Answer
First of all, under periodic, the inventory account is not continuously updated; it is updated at the end of the period Perpetual would be updated constantly. FIFO means first in – first out; the goods that are sold are the oldest ones there. LIFO means last in - first out; the goods that are sold are the newest ones.
total cost
units
4800
150
2310
70
3420
90
5040
140
1950
50
17520
500
Available for sale: There are 500 units available for sale with a total cost of $17520. 300 units were sold, so 200 are left in ending inventory.
a. assuming periodic:
Cost of goods sold under LIFO: 300 were sold. These were the 300 newest ones:
date of purchase
units
unit cost
total cost
13-Oct
50
39
1950
11-Jun
140
36
5040
15-Apr
90
38
3420
22-Feb
20
33
660
300
11070
Cost of goods sold under LIFO is $11,070.
Cost of goods sold under FIFO: 300 were sold. These were the 300 oldest ones:
date of purchase
units
unit cost
total cost
1/1 - beginning
150
32
4800
22-Feb
70
33
2310
15-Apr
80
38
3040
300
10150
Cost of goods sold under FIFO is $10,150.
Ending inventory = Goods available for sale – cost of goods sold.
For LIFO: 17520 – 11070 = $6450
For FIFO: 17520 – 10150 = $7370
(b) Assuming perpetual:
FIFO is the same under periodic and pertual. Cost of goods sold is $10,150 and ending inventory is $7370.
For LIFO, it is not the same:
1-Jan
150
32
4800
22-Feb
150
32
4800
70
33
2310
7-Mar
120
32
3840
15-Apr
120
32
3840
90
38
3420
11-Jun
120
32
3840
90
38
3420
140
36
5040
28-Jul
120
32
3840
90
38
3420
40
36
1440
13-Oct
120
32
3840
90
38
3420
40
36
1440
50
39
1950
4-Dec
120
32
3840
80
38
3040
6880
The above shows you what the inventory consists of each time anything is sold or purchased; it is constantly updated.
Ending inventory is $6880.
Cost of goods sold = 17520 – 6880 = $10,640.
total cost
units
4800
150
2310
70
3420
90
5040
140
1950
50
17520
500
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