Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 1

Cost-flow assumptions—FIFO and LIFO using periodic and perpetual systems The inventory records of Kuffel Co. reflected the following information for the year ended December 31, 2010:

Date	Transaction	Number of Units	Unit Cost	Total Cost
1/1	Beginning inventory	150	$30	$4,500
2/22	Purchase	70	33	2,310
3/7	Sale	(100)	?	?
4/15	Purchase	90	35	3,150
6/11	Purchase	140	36	5,040
9/28	Sale	(100)	?	?
10/13	Purchase	50	38	1,900
12/4	Sale	(100)	?	?

Required:

a. Assume that Kuffel Co. uses a periodic inventory system. Calculate cost of goods sold and ending inventory under FIFO and LIFO.

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b. Assume that Kuffel Co. uses a perpetual inventory system. Calculate cost of goods sold and ending inventory under FIFO and LIFO.

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c. Explain why the FIFO results for cost of goods sold and ending inventory are the same in your answers to parts a and b, but the LIFO results are different.

Step 1 of 9

Ending inventory

As per FIFO cost flow assumption, of these 200 units of ending inventory, 10 units belong to units purchased on 3/7/13, 140 units belongs to purchase on 4/10/13 and the remaining 50 units belong to units purchased on 9/28/13.

The cost of ending inventory is

The cost of ending inventory as per FIFO cost flow assumption is