Question

8. Brady Inc. reported FIFO ending inventory of $114,000 and FIFO beginning inventory of $110,000 for 2018. Inventory purchases for 2018 were $237,500 and the change in the LIFO reserve from 2017 was an increase in the LIFO reserve of $675. Calculate the value of COGS LIFO for Brady Inc. in 2018 (Assume that there are no inventory write-downs).

Answer 1

Answer:

$232,825

Explanation:

Step 1: Calculation of cost of goods sold (COGS) under First In First Out (FIFO)

Since we know that;

Ending inventory = Beginning inventory + Purchase - COGS of FIFO

Therefore, we can rearrange to make COGS the subject of the formula and substitute the values as follows:

COGS under FIFO = Beginning inventory + Purchase - Ending inventory

                               = $110,000 + $237,500 - $114,000 =

COGS under FIFO = $233,500

Step 2: Calculation of COGS under Last In First Out (LIFO)

COGS under LIFO = COGS under FIFO - Rise in LIFO reserve

                              = $233,500 - $675

COGS under LIFO = $232,825

Therefore, the value of COGS LIFO for Brady Inc. in 2018 is $232,825.