Question #111437

Suppose you have 50 units of inventory at the beginning of month of April 01, 2020, per unit cost is XXX [Suppose per unit cost at your own which must not match with someone else]. On 5th April, 2020 you purchased 100 more units at the rate of XXX, after 3 days on 8th April, 2020 you sold 70 units and on 10th April , 2020 purchased 120 units and the per unit cost is XXX.. On 15th April you sold 130 units.

After 5 days on 20th April you purchased 150 units at the rate of XXX, and 2 days later you purchased 50 units at the rate of XXX and on 30th April, 2020 you sold 200 units.

You are required to make table of inventory valuation under FIFO, LIFO and Average costing method.

After 5 days on 20th April you purchased 150 units at the rate of XXX, and 2 days later you purchased 50 units at the rate of XXX and on 30th April, 2020 you sold 200 units.

You are required to make table of inventory valuation under FIFO, LIFO and Average costing method.

Expert's answer

Let's take the following as an example prices:

Suppose you have 50 units of inventory at the beginning of month of April 01, 2020, per unit cost is 5 [Suppose per unit cost at your own which must not match with someone else]. On 5th April, 2020 you purchased 100 more units at the rate of 6, after 3 days on 8th April, 2020 you sold 70 units and on 10th April , 2020 purchased 120 units and the per unit cost is 7. On 15th April you sold 130 units.

After 5 days on 20th April you purchased 150 units at the rate of 4, and 2 days later you purchased 50 units at the rate of 3 and on 30th April, 2020 you sold 200 units.

You are required to make table of inventory valuation under FIFO, LIFO and Average costing

**FIFO**

quantity price inventory cost

*50 5 250 *balance

*100 6 600 *bought

*70:*

**50 5 250 Sales**

**20 6 120 Sales**

*120 7 840 *bought

*130:*

**80 6 240 Sales**

**50 7 350 Sales**

*150 4 600 *bought

*50 3 150 *bought

*200:*

*70 7 490 ***Sales**

*130 4 520 ***Sales**

20 4 80balance

50 3 150 balance

**LIFO**

quantity price inventory cost

*50 5 250 *balance

*100 6 600*bought

*70:*

**70 6 420Sales**

*120 7 840*bought

*130:*

**120 7 840Sales**

**10 6 600Sales**

*150 4 600*bought

*50 3 150*bought

*200:*

**50 3 150Sales**

**150 4 600Sales**

**20 6 120 **balance

**50 5 250**balance

**Average costing**

** **quantity price inventory cost

*50 5 250 *balance

*100 6 600 *bought

*70:*

**70 5.67 396.67 Sales**

*120 7 840 *bought

*130:*

**130 6.6 858 Sales**

*150 4 600 *bought

*50 3 150 *bought

*200:*

**200 4.4 880 Sales**

50 3 150 balance

In the method, the average price is calculated as the weighted average cost of all stocks

In the future, the price is recalculated each time, taking into account the purchased and remaining stocks.

Learn more about our help with Assignments: Finance

## Comments

## Leave a comment