Question

est Co. recorded the following inventory information during the month of February: Units Unit cost Total cost Units on Hand Balance on 2/1 800 $2 $1,600 800 Purchased on 2/8 1,000 $3 $3,000 1,800 Sold on 2/14 1,500 300 Purchased on 2/17 2,000 $1 $2,000 2,300 Sold on 2/23 1,600 700 Purchased on 2/28 800 $4 $3,200 1,500 West uses the LIFO method to cost inventory. What amount should West report as inventory at the end of February under each of the following methods of recording inventory

Answer 1

Answer:

period:      3,700

perpetual: 4,200

Explanation:

periodic system:

available goods:

800 + 1000 + 2000 + 800 = 4,600

sales: 1,500 + 1,600 = 3,100

ending inventory 1,500 units

under LIFO we sale the newest units first so the ending inventory is compose of the beginning inventory + oldest purchase:

ending inventory        1,500

beginning inventory   (800)

from purchase             700

Ending inventory valuation:

800 x 2 + 700 x 3 = 1,600 + 2,100 = $3,700

Perpetual System:

We evaluate after each sale so:

inventory available at first sale:

beginning        800

2/8 purchase 1,000

sale for           (1,500)

ending inventory 300 units of beginning inventory

inventory available at second sale:

beginning          300 units

2/17 purchase 2,000

Sales for          (1,600) units

ending inventory:

beginning           300 units   x 2  =  600

2/17 purchase     400 units  x  1  =   400

+ 2/28 purchase 800 units  x 4 = 3,200  

                   total  valuation           4,200