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.
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 600bought
70:
70 6 420Sales
120 7 840bought
130:
120 7 840Sales
10 6 600Sales
150 4 600bought
50 3 150bought
200:
50 3 150Sales
150 4 600Sales
20 6 120 balance
50 5 250balance
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.
#332078 on Oct 2022
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