Question

Pina Football Shop began operations on January 2, 2017. The following stock record card for footballs was taken from the records at the end of the year.
Date Voucher Terms Units Received Unit Invoice Cost Gross Invoice
Amount
1/15 10624 Net 30 67 $28 $1,876
3/15 11437 1/5, net 30 82 23 1,886
6/20 21332 1/10, net 30 107 21 2,247
9/1 227644 1/10, net 30 101 17 1,717
11/24 31269 1/10, net 30 93 16 1,488
Totals 450 $9,214
A physical inventory on December 31, 2017, reveals that 111 footballs were in stock. The bookkeeper informs you that all the discounts were taken. Assume that Pina Football Shop uses the invoice price less discount for recording purchases.
(a) Compute the December 31, 2017, inventory using the FIFO method.
B.) Compute the 2017 cost of goods sold using the LIFO method.

Answer 1

Answer:

A. FIFO $1,794

B. LIFO $6,326

Explanation:

(a) Computation for the December 31, 2017, inventory using the FIFO method

Value of closing Stock

93 Footballs purchased in November = 93 * $16 93 Footballs purchased in November= $1,488

18 Footballs purchased in September= (111-93)* $17

18 Footballs purchased in September= 18* $17

18 Footballs purchased in September= $306

Total Value as on 31 December, 2017 =$1,488+$396

Total Value as on 31 December, 2017=$1,794

Therefore the December 31, 2017, inventory using the FIFO method will be $1,794

B.) Computation for the 2017 cost of goods sold using the LIFO method.

First step is to calculate the Value of closing Stock

67 Footballs purchased in January= 67 * $28

67 Footballs purchased in January = $1,876

44 Footballs purchsed in March= (111-67)* $23

44 Footballs purchsed in March=44*$23

44 Footballs purchsed in March= $1,012

Total Value as on 31 December, 2017=$1,876+$1,012

Total Value as on 31 December, 2017 = $2,888

Now let calculate the Cost of goods sold using this formula

Cost of goods sold

= Gross Invoice amount - Value of closing stock

Let plug in the formula

Cost of goods sold= $9,214 - $2,888

Cost of goods sold= $6,326

Therefore the 2017 cost of goods sold using the LIFO method will be $6,326