Some of the information found on a detail inventory card for Sage Inc. for the f

Question

Some of the information found on a detail inventory card for Sage Inc. for the first month of operations is as follows.

Received

Date

No. of Units

Unit Cost

Issued,
No. of Units

Balance,
No. of Units

1,000

1. From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost.

*I cannot get the LIFO answer; could you please help with that one especially?

2. If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1), (2), and (3) above be the same? What amount would be shown as ending inventory?

*They're not all the same; I keep getting people telling me they are, but the answer is marked wrong. LIFO and Weighted-Average change but I need help finding the actual values they change to*

Received

Date

No. of Units

Unit Cost

Issued,
No. of Units

Balance,
No. of Units

January 2 1,600 $4.65 1,600 7 1,100 500 10 1,000 4.96 1,500 13 900 600 18 1,400 5.12 700 1,300 20 1,100 200 23 1,700 5.27 1,900 26 1,200 700 28 2,000 5.43 2,700 31 1,700

1,000

Explanation / Answer

1.

First-in-first-out (FIFO): Material receives first will be issued first. Therefore, the closing inventory will be valued at the most recent price or rate. This is system is appropriate when price decreases.

FIFO table

Dt.

Receive

Issue (cost of goods sold)

Balance

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

2/1

1600

4.65

7440

1600

4.65

7440

7/1

1100

4.65

5115

500

4.65

2325

10/1

1000

4.96

4960

500

1000

4.65

4.96

7,285

13/1

900

500 at 4.65 + 400 at 4.96

4309

600

4.96

2976

18/1

1400

5.12

7168

600

1400

4.96

5.12

10144

18/1

700

600 at 4.96 + 100 at 5.12

3488

1300

5.12

6656

20/1

1100

5.12

5632

200

5.12

1024

23/1

1700

5.27

8959

200

1700

5.12

5.27

9983

26/1

1200

200 at 5.12 + 1000 at 5.27

6294

700

5.27

3689

28/1

2000

5.43

10860

700

2000

5.27

5.43

14549

31/1

1700

700 at 5.27 + 1000 at 5.43

9119

1000

5.43

5430

Ending inventory cost = Balance on the last date of transaction, that is on 31/1

                                    = $5,430 (Answer)

2.

Last-in-first-out (LIFO): Material receives last will be issued first. Therefore, the closing inventory will be valued at the most earlier price or rate. This is system is appropriate when price increases.

LIFO table

Dt.

Receive

Issue (cost of goods sold)

Balance

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

2/1

1600

4.65

7440

1600

4.65

7440

7/1

1100

4.65

5115

500

4.65

2325

10/1

1000

4.96

4960

500

1000

4.65

4.96

7,285

13/1

900

4.96

4464

500

100

4.65

4.96

2821

18/1

1400

5.12

7168

500

100

1400

4.65

4.96

5.12

9989

18/1

700

5.12

3584

500

100

700

4.65

4.96

5.12

6405

20/1

1100

700 at 5.12 + 100 at 4.96 + 300 at 4.65

5475

200

4.65

930

23/1

1700

5.27

8959

200

1700

4.65

5.27

9889

26/1

1200

5.27

6324

200

500

4.65

5.27

3565

28/1

2000

5.43

10860

200

500

2000

4.65

5.27

5.43

14425

31/1

1700

5.43

9231

200

500

300

4.65

5.27

5.43

5194

Ending inventory cost = Balance on the last date of transaction, that is on 31/1

                                    = $5,194 (Answer)

3.

Average method

Dt.

Receive

Issue (cost of goods sold)

Balance

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

2/1

1600

4.65

7440

1600

4.65

7440

7/1

1100

4.65

5115

500

4.65

2325

10/1

1000

4.96

4960

1500

4.857

7285

13/1

900

4.857

4371

600

4.857

2914

18/1

1400

5.12

7168

2000

5.041

10082

18/1

700

5.041

3529

1300

5.041

6553

20/1

1100

5.041

5545

200

5.041

1008

23/1

1700

5.27

8959

1900

5.245

9967

26/1

1200

5.245

6294

700

5.245

3673

28/1

2000

5.43

10860

2700

5.382

14533

31/1

1700

5.382

9149

1000

5.382

5384

Ending inventory cost = Balance on the last date of transaction, that is on 31/1

                                    = $5,384 (Answer)

Dt.

Receive

Issue (cost of goods sold)

Balance

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

Qty.

Rate $

Amount $

2/1

1600

4.65

7440

1600

4.65

7440

7/1

1100

4.65

5115

500

4.65

2325

10/1

1000

4.96

4960

500

1000

4.65

4.96

7,285

13/1

900

500 at 4.65 + 400 at 4.96

4309

600

4.96

2976

18/1

1400

5.12

7168

600

1400

4.96

5.12

10144

18/1

700

600 at 4.96 + 100 at 5.12

3488

1300

5.12

6656

20/1

1100

5.12

5632

200

5.12

1024

23/1

1700

5.27

8959

200

1700

5.12

5.27

9983

26/1

1200

200 at 5.12 + 1000 at 5.27

6294

700

5.27

3689

28/1

2000

5.43

10860

700

2000

5.27

5.43

14549

31/1

1700

700 at 5.27 + 1000 at 5.43

9119

1000

5.43

5430

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.