Exercise 6-4 (Part Level Submission) Elsa\'s Boards sells a snowboard, Xpert, th

Question

Exercise 6-4 (Part Level Submission) Elsa's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts. Information relating to Elsa's purchases of Xpert snowboards during September is shown below. During the same month, 162 Xpert snowboards were sold. Elsa's uses a periodic inventory system. Unit Explanation Units Cost Total Cost Date Sept. Inventory Sept. 12 Sept. 19 Sept. 26 3,500 6,240 2,943 105710S 35 $100 Purchases Purchases Purchases 60 104 27 109 67 7,035 Totals 189 $19,718 ? (a) Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. FIFO LIFO The ending inventory at September 30 s Cost of goods sold

Explanation / Answer

(a) FIFO LIFO The ending inventory at September 30 $     2,835 $    2,700 Cost of goods sold $ 16,883 $ 17,018 (b) FIFO FIFO The sum of ending inventory and cost of goods sold $     19,718 $ 19,718 Note: Sum of ending inventory and cost of goods sold is always equal to Total Cost of goods available for sale that is already given in question. Workings: Under periodic inventory system, Inventory records are updated at the end of period(like at the end of September in this case). FIFO stands for first in first out.It means inventory bought first would be sold first. Total Units available for sale 189 Total Units sold 162 Ending Inventory units 27 It means 27 units inventory that is remained is form part of last purchase of Sep. 26 because as per FIFO inventory records are updated with sales from beginning inventory. Ending Inventory = 27 x $        105 = $       2,835 Cost of goods sold = Total cost of goods avaialble for sale -Ending Inventory = $ 19,718 - $     2,835 = $     16,883 Thus, Ending Inventory $    2,835 Cost of goods sold $ 16,883 LIFO stands for last in first out.It means inventory bought first would be sold first and so ending inventory will form part of Sep. 1 purchase. Ending Inventory = 27 x $        100 = $       2,700 Cost of goods sold = Total cost of goods avaialble for sale -Ending Inventory = $ 19,718 - $     2,700 = $     17,018 Thus, Ending Inventory $    2,700 Cost of goods sold $ 17,018 FIFO LIFO Ending Inventory $    2,835 $    2,700 Cost of goods sold $ 16,883 $ 17,018 Total $ 19,718 $ 19,718

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