Question

Lisa Company sells many products. Gizmo is one of its popular items. Below is an analysis of the inventory purchases and sales of Gizmo for the month of March. Lisa Company uses the perpetual inventory system. Purchases Sales Units Unit Cost Units Selling Price/Unit 3/1 Beginning inventory 105 $38 3/3 Purchase 65 $50 3/4 Sales 60 $80 3/10 Purchase 195 $50 3/16 Sales 90 $90 3/19 Sales 70 $95 3/25 Sales 55 $90 3/30 Purchase 35 $65

Using the FIFO assumption, calculate the amount charged to cost of goods sold for March. Cost of goods sold $ eTextbook and Media Using the FIFO assumption, calculate the amount charged to cost of goods sold for March. Cost of goods sold $ eTextbook and Media Using the LIFO assumption, calculate the amount assigned to the inventory on hand on March 31. Ending Inventory $

Answer 1

Lisa Company

a. Cost of goods sold (FIFO) = $12,490

b. Cost of Ending Inventory (LIFO) = $5,695

Step-by-step explanation:

a) Data and Calculations:

Inventory system = Perpetual

Purchases Sales Units Unit Cost Units Selling Total Total

Price/Unit Costs Revenue

3/1 Beginning inventory 105 $38 $3,990

3/3 Purchase 65 $50 3,250

3/4 Sales 60 $80 $4,800

3/10 Purchase 195 $50 9,750

3/16 Sales 90 $90 8,100

3/19 Sales 70 $95 6,650

3/25 Sales 55 $90 4,950

3/30 Purchase 35 $65 2,275

3/31 Total 400 275 $19,265 $24,500

Ending inventory = 125 (400 - 275)

Cost of goods sold (FIFO):

Ending inventory cost:

3/30 Purchase 35 $65 $2,275

3/10 Purchase 90 $50 4,500

Total cost of ending inventory = $6,775

Cost of goods available for sale = $19,265

Total cost of ending inventory = $6,775

Cost of goods sold = $12,490

LIFO (under perpetual inventory system):

Cost of Ending Inventory:

3/1 Beginning inventory 90 $38 $3,420

3/30 Purchase 35 $65 2,275

Total 125 $5,695

b) The LIFO method under perpetual inventory system assumes that 275 units of goods sold were picked from the purchases made on March 3 and March 10, with the remaining 15 units from the beginning inventory. This will leave 90 units in the beginning inventory and 35 purchased on March 30 to constitute the ending inventory.