Question

Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. The following are the transactions for the month of July.

Units Unit Cost
July 1 Beginning Inventory 2,700 $47
July 5 Sold 1,350
July 13 Purchased 6,700 51
July 17 Sold 3,700
July 25 Purchased 8,700 57
July 27 Sold 5,700

Required:
Calculate the cost of ending inventory and cost of goods sold assuming a perpetual inventory system is used in combination with (a) FIFO and (b) LIFO.

Answer 1

Aircard Corporation

Perpetual Inventory System

FIFO LIFO

Ending Inventory = $418,950 $387,450

Cost of goods sold = $545,550 $577,050

Step-by-step explanation:

a) Data and Calculations:

Date Transactions Units Unit Cost Total

July 1 Beginning Inventory 2,700 $47 $126,900

July 5 Sold (1,350)

July 13 Purchased 6,700 51 341,700

July 17 Sold (3,700)

July 25 Purchased 8,700 57 495,900

July 27 Sold (5,700)

July 31 Total available 18,100 $964,500

July 31 Total units sold (10,750)

July 31 Ending Inventory 7,350

FIFO:

Cost of Ending Inventory

Date Transactions Units Unit Cost Total Balance

July 1 Beginning Inventory 2,700 $47 $126,900 $126,900

July 5 Sold (1,350) $63,450

July 13 Purchased 6,700 51 341,700 405,150

July 17 Sold (3,700) 221,850

July 25 Purchased 8,700 57 495,900 717,750

July 27 Sold (5,700) 418,950

Ending Inventory = $418,950

Cost of goods sold = $545,550 ($964,500 -$418,950)

LIFO:

Cost of Ending Inventory

Date Transactions Units Unit Cost Total Balance

July 1 Beginning Inventory 2,700 $47 $126,900 $126,900

July 5 Sold (1,350) $63,450

July 13 Purchased 6,700 51 341,700 405,150

July 17 Sold (3,700) 216,450

July 25 Purchased 8,700 57 495,900 712,350

July 27 Sold (5,700) 387,450

Ending Inventory = $387,450

Cost of goods sold = $577,050 ($964,500 -$387,450)