Asked by Jason Jiang on May 16, 2024
Verified
The following information is available for Clancy Company: Beginning inventory 600 units at $4 First purchase 900 units at $6.50 Second purchase 500 units at $7.20\begin{array}{ll}\text { Beginning inventory } & 600 \text { units at } \$ 4 \\\text { First purchase } & 900 \text { units at } \$ 6.50 \\\text { Second purchase } & 500 \text { units at } \$ 7.20\end{array} Beginning inventory First purchase Second purchase 600 units at $4900 units at $6.50500 units at $7.20 Assume that Clancy uses a periodic inventory system and that there are 760 units left at the end of the month.
Instructions
Compute the cost of ending inventory under the
(a) FIFO method.
(b) LIFO method.
FIFO
"First In, First Out," an inventory valuation method where the first items placed into inventory are the first sold.
LIFO
An accounting method for valuing inventory that assumes the last items produced or purchased are the first ones sold.
Ending Inventory
The total value of goods available for sale at the end of an accounting period, calculated as the beginning inventory plus purchases minus cost of goods sold.
- Calculate the valuation of concluding inventory and the cost associated with goods sold employing diverse inventory costing techniques.
Verified Answer
500×$7.20=$3,600260×$6.50=1,690‾$5.290‾\begin{array} { r } 500 \times \$ 7.20 = \$ 3,600 \\260 \times \$ 6.50 = \underline { 1,690 } \\ \underline { \$ 5.290 } \end{array}500×$7.20=$3,600260×$6.50=1,690$5.290
(b) LIFO Ending Inventory Cost:
600×$4=$2,400160×$6.50=1,040‾$3,440‾\begin{array} { r } 600 \times \$ 4 = \$ 2,400 \\160 \times \$ 6.50 = \underline { 1,040 } \\ \underline { \$ 3,440 }\end{array}600×$4=$2,400160×$6.50=1,040$3,440
Learning Objectives
- Calculate the valuation of concluding inventory and the cost associated with goods sold employing diverse inventory costing techniques.
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