90.2K

Verified Solution

Link Copied!

eBook Show Me How FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 21 units at $48 Sale 5 units at $72 First purchase 25 units at $50 24 units at $73 Second purchase 30 units at $52 29 units at $73 The firm uses the perpetual inventory system, and there are 18 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? 1,560 x Sale Sale b. What is the total cost of the ending inventory according to LIFO? 871 x Feedback Check My Work a. Note that this exercise uses the perpetual inventory system. FIFO means that the first units purchased are assumed to be the first to be so beginning inventory. Is the remaining amount of the beginning inventory layer enough to satisfy the second sale? If not, the remaining amour second sale. If the remainder from the first purchase is not enough to satisfy the third sale, then cost of merchandise sold will come from the b. Note that this exercise uses the perpetual inventory system. When the perpetual Inventory system is used, revenue is recorded each time Therefore after each sale, the remaining or ending inventory is made up of the first purchases. Think of your inventory in terms of "layers". TIL by the most recent units purchased and then by the units remaining in beginning inventory. If the third sale is only partially satisfied by the mo nrold units from first purchase and the beginning inventory are added together as

Answer & Explanation Solved by verified expert

See Answer