Andrea\'s Boards sells a snowboard Xpert, that is popular with snowboard enthusi
ID: 2346024 • Letter: A
Question
Andrea's Boards sells a snowboard Xpert, that is popular with snowboard enthusiasts. Below is information relating to Andrea's purchases of Xpert snowboards during September. During the same month, 121 Xpert snowboards were sold. Andrea's uses a periodic inventory system.Date Explanation Units Unit Cost Total Cost
Sept 1 Inventory 26 $ 97 $2,522
Sept 12 Purchases 45 105 4,725
Sept 19 Purchases 20 108 2,160
Sept 26 Purchases 50 109 5,450
Totals 141 $14,857
Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods.
FIFO LIFO
Ending Inventory $ $
Cost of goods sold $ $
For both FIFO and LIFO, compute the sum of cost of goods sold and ending inventory. What do you notice about the result for each method.
(Which one is correct)
the sums for FIFO and LIFO are equal
the sum is greater for LIFO
the sum is greater for FIFO
Explanation / Answer
121 were sold. 20 were left in ending inventory. FIFO: Means first in, first out. Oldest ones are sold and newest ones are left in ending inventory. Endign inventory consists of the newest ones: 21 @109 = $2289 Cost of goods sold = oldest ones: 26 @ 97 = 2522 45 @ 105 = 4725 20 @ 108 = 2160 29 @ 109 = 3161 total = 12568 cost of goods sols = $12568 LIFO: Last in first out. Oldest ones are left in endingin inventory and newest ones are sold. Ending inventory consists of oldest ones: 21 @ 97 = $2037 cost of goods sold = newest ones 50 @ 109 = 5450 20 @ 108 = 2160 45 @ 105 = 4725 5 @ 97 = 485 total = 12,820 cost of goods sold = 12,820 answer: FIFO: ending inventory = 2289 cost of goods sold = 12568 LIFO: ending inventory = 2037 Cost of goods sold = 12820 The sums for FIFO and LIFO are equal (they both add up to 14,857)