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Chapter 6
Inventories
Lecture 28
Lecture Overview
• FIFO (Perpetual Inventory System)• FIFO (Periodic Inventory System)
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
LIFO Perpetual Inventory Account
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200
The firm begins the year with 10 units of Item 127B on hand at a total cost of
200.
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 4 7 20 140 3 20 60
On January 4, the firm sold 7 units at 30 each.
LIFO Perpetual Inventory Account
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 4 7 20 140 3 20 60 10 8 21 168 3 20 60
8 21 168
On January 10, the firm purchased eight
units at 21 each.Note that a new layer is formed.
Note that a new layer is formed.
LIFO Perpetual Inventory Account
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 4 7 20 140 3 20 60 10 8 21 168 3 20 60
8 21 168
On January 22, the firm sells four
units at $31 each.
On January 22, the firm sells four
units at $31 each.
22 4 21 84 3 20 604 21 84
Of the 4 units sold, all come from the most recent
purchase at a cost of 21 each.
LIFO Perpetual Inventory Account
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 4 7 20 140 3 20 60 10 8 21 168 3 20 60
8 21 168
On January 28, sold two units at 32 each.
22 4 21 84 3 20 604 21 84
28 2 21 42 3 20 602 21 42
LIFO Perpetual Inventory Account
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 4 7 20 140 3 20 60 10 8 21 168 3 20 60
8 21 168
On January 30, purchase 10 units at 22
each.
22 4 21 84 3 20 604 21 84
28 2 21 42 3 20 602 21 42
30 10 22 220 3 20 602 21 42
10 22 220
LIFO Perpetual Inventory Account
Perpetual Inventory Costs
Inventory cost data to demonstrate FIFO and LIFO Perpetual Systems
Cost ofMdse. Sold
Item 127B Units Cost Price
Jan. 1 Inventory 10 204 Sale 7 30
10 Purchase 8 2122 Sale 4 3128 Sale 2 3230 Purchase 10 22
Item 127B
Purchases Cost of Mdse. Sold Inventory Balance
Unit Total Unit Total Unit Total Date Qty. Cost Cost Qty. Cost Cost Qty. Cost Cost
Jan. 1 10 20 200 4 7 20 140 3 20 60 10 8 21 168 3 20 60
8 21 168 22 4 21 84 3 20 60
4 21 84 28 2 21 42 3 20 60
2 21 42 30 10 22 220 3 20 60
2 21 4210 22 220
Totals 18 388 13 266 15 322
LIFO Perpetual Inventory Account
Lifo Periodic
Jan. 1 Beginning Inventory
200 units @ Rs.9
Mar. 10 Purchase300 units @ Rs.10
400 units @ Rs.11 Sept. 21 Purchase
100 units @ Rs.12 Nov. 18 Purchase
1,000 units available for sale during year
Lifo Periodic
Using lifo, the most recent batch purchased is considered the first
batch of merchandise sold.
Using lifo, the most recent batch purchased is considered the first
batch of merchandise sold.
Jan. 1 Beginning Inventory
200 units @ Rs.9
Mar. 10 Purchase300 units @ Rs.10
400 units @ Rs.11 Sept. 21 Purchase
100 units @ Rs.12 Nov. 18 Purchase
1,000 units available for sale during year
Lifo Periodic
Assume again that 700 units were sold
during the year.
Assume again that 700 units were sold
during the year.
200 units @ Rs.9
300 units @ $10
400 units @ $11
100 units @ $12
1,000 units available for sale during year
Lifo Periodic
Sold these 100
Sold these 400
Sold 200 of these100 units @ Rs.10
=Rs.1,800 Jan. 1
= 3,000 Mar. 10
= 4,400 Sept. 21
= 1,200 Nov. 18
$10,400
0
0
1,000
Ending Inventory
Rs.2,800
Cost of merchandise available for sale Rs.10,400Less ending inventory 2,800Cost of merchandise sold Rs. 7,600
Lifo Periodic
Jan. 1200 units at Rs.9
Summary of Lifo Periodic
Mar. 10300 units at Rs.10
Sep. 21400 units at Rs.11
Nov. 18100 units at Rs.12
Rs.1,800
Rs.3,000
Rs.4,400
Rs.1,200
Rs.1,800
Rs.1,000
Cost ofMerchandise
Sold
200 units at Rs.9
Rs.10,400
Rs.4,400
Rs.1,200
Rs.2,800
Rs.7,600
100 units at Rs.10
200 units at Rs.10
400 units at Rs.11
100 units at Rs.12
Rs.2,000
700 units
1,000 units
300 units
Purchases
MerchandiseAvailablefor Sale
Rs.1,800
Cost of Merchandise Sold
Lecture Overview
• LIFO (Perpetual Inventory System)• LIFO (Periodic Inventory System)
End of Lecture 27
