Dollar-value LIFO method

Part A:
Gant Company has a beginning inventory in year one of $300,000 and an ending inventory of $363,000. The price level has increased from 100 at the beginning of the year to 110 at the end of year one. Calculate the ending inventory under the dollar-value LIFO method.

Part B
At the end of year two, Gant's inventory is $437,000 in terms of a price level of 115 which exists at the end of year two. Calculate the inventory at the end of year two continuing the use of the dollar-value LIFO method.

Solutions

Perpetual LIFO and Periodic FIFO

Shanty Co. sells item A as part of its product line. Information as to balances on hand, purchases, and sales of item A are given in the following table for the first six months of 2007.

Instructions
(a) Compute the ending inventory at June 30 under the perpetual LIFO inventory pricing method.
(b) Compute the cost of goods sold for the first six months under the periodic FIFO inventory pricing method.

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Inventory costing using LIFO/perpetual system

A record of transactions for the month of May was as follows:

Purchases

• May 01, 400 @ $4.20 (balance)
• May 04, 1,300 @ $4.10
• May 08, 800 @ $4.30
• May 14, 700 @ $4.40
• May 22, 1,200 @ $4.50
• May 29, 500 @ $4.55

Sales

• May 03, 300 @ $7.00
• May 06, 1,000 @ 7.00
• May 12, 900 @ 7.50
• May 18, 400 @ 7.50
• May 25, 1,400 @ 8.00
  

Assuming that perpetual inventory records are kept in dollars, determine the inventory using LIFO.

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FIFO and LIFO periodic inventory methods

The Pine Shop shows the following data related to an item of inventory:

• January 01, Balance, 100 units @ $5.00
• January 09, Purchase, 300 units @ $5.40
• January 19, Purchase, 70 units @ $6.00
• January 31, Balance, 120 units

Instructions

1. What value should be assigned to the ending inventory using FIFO?
2. What value should be assigned to cost of goods sold using LIFO?

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FIFO and LIFO inventory methods

During June, the following changes in inventory item 27 took place:


Perpetual inventories are maintained.

Instructions
What is the cost of the ending inventory for item 27 under the following methods? (Show calculations.)
(a) FIFO.
(b) LIFO.

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Estimating cost of ending inventory

The following data relate to the records of Pearson Inc. for the month of September:



Using these data, estimate the cost of ending inventory for each situation below:
(1) Markup is 50 percent on cost.
(2) Markup is 60 percent on sales.
(3) Markup is 25 percent on cost.
(4) Markup is 40 percent on sales.

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