The Mann Corporation began operations in 2011. Information relating to the compa

Question

The Mann Corporation began operations in 2011. Information relating to the company's purchases of inventory and sales of products for 2011 and 2012 is presented below.

2011

February 1 Purchase 200 units @ $20 per unit

May 1 Sold 120 units @ $50 per unit

August 1 Purchase 100 units @ $28 per unit October 1 Sold 130 units @ $50 per unit

2012

February 1 Purchase 100 units @ $32 per unit May 1 Sold 80 units @ $60 per unit

August 1 Purchase 100 units @ $36 per unit October 1 Sold 100 units @ $70 per unit

Calculate the LIFO cost of goods sold and ending inventory for 2011 and 2012 assuming use of (a) the periodic method and (b) the perpetual method.

Explanation / Answer

(a) LIFO COST OF GOODS SOLD PERIODIC METHOD Date Beginning Inventory Purchase Sales Ending Inventory Quantity Rate Amount Quantity Rate Amount Quantity Rate Amount Quantity Rate Amount Feb1,2011 0 200 $20 $4,000 200 $20 $4,000 May1,2011 200 $20 $4,000 120 80 August 1,2011 80 100 $28 $2,800 180 October1,2011 180 130 50 December31,2011 50 $20 $1,000 50 $20 $1,000 TOTAL 300 $6,800 250 January1,2012 50 $20 $1,000 50 $20 $1,000 Feb1,2012 50 100 $32 $3,200 150 May1,2012 150 80 70 August 1,2012 70 100 $36 $3,600 170 October1,2012 170 100 70 December31,2012 70 70 TOTAL 200 $6,800 180 YEAR 2011 Units A Beginning Inventory 0 B Purchase 300 C=A+B Total available 300 D Sale 250 E=C-D Ending Inventory 50 LIFO Cost of ending Inventory $1,000 (50*20) Amount A Beginning Inventory $0 B Purchase $6,800 C=A+B Total available $6,800 D Ending Inventory $1,000 E=C-D Cost of goods sold $5,800 YEAR 2012 Units A Beginning Inventory 50 B Purchase 200 C=A+B Total available 250 D Sale 180 E=C-D Ending Inventory 70 LIFO Cost of ending Inventory $1,640 (50*$20+20*$32) Amount A Beginning Inventory $1,000 B Purchase $6,800 C=A+B Total available $7,800 D Ending Inventory $1,640 E=C-D Cost of goods sold $6,160 (a) LIFO COST OF GOODS SOLD PERPETUAL METHOD Date Beginning Inventory Purchase Sales Ending Inventory Quantity Rate Amount Quantity Rate Amount Quantity Cost/unit Amount Quantity Rate Amount Feb1,2011 0 200 $20 $4,000 200 $20 $4,000 May1,2011 200 $20 $4,000 120 $20 $2,400 80 $20 $1,600 August 1,2011 80 $20 $1,600 100 $28 $2,800 80 $20 $1,600 100 $28 $2,800 October1,2011 80 $20 $1,600 100 $28 $2,800 50 $20 $1,000 100 $28 $2,800 30 $20 $600 December31,2011 50 $20 $1,000 50 $20 $1,000 TOTAL 300 $6,800 250 $5,800 January1,2012 50 $20 $1,000 50 $20 $1,000 Feb1,2012 50 $20 $1,000 100 $32 $3,200 50 $20 $1,000 100 $32 $3,200 May1,2012 50 $20 $1,000 80 $32 $2,560 50 $20 $1,000 100 $32 $3,200 20 $32 $640 August 1,2012 50 $20 $1,000 100 $36 $3,600 50 $20 $1,000 20 $32 $640 20 $32 $640 100 $36 $3,600 October1,2012 50 $20 $1,000 100 $36 $3,600 50 $20 $1,000 20 $32 $640 20 $32 $640 100 $36 $3,600 December31,2012 50 $20 $1,000 50 $20 $1,000 20 $32 $640 20 $32 $640 TOTAL 200 $6,800 180 $6,160 YEAR 2011 Amount LIFO Cost of ending Inventory $1,000 (50*20) LIFO Cost of goods sold $5,800 YEAR 2012 Amount LIFO Cost of ending Inventory $1,640 (50*$20+20*$32) LIFO Cost of goods sold $6,160

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