Elsa's Boards sells a snowboard, Xpert, that is popular with snowboard enthusiasts, Information relating to Elsa's purchases of Xpert snowboards during September is shown below. During the same month, 121 Xpert snowboards were sold. Elsa's uses a periodic inventory system.
Instructions
- Compute the ending inventory at September 30 and cost of goods sold using the FIFO and LIFO methods. Prove the amount allocated to cost of goods sold under each method.
- For both FIFO and LIFO, calculate the sum of ending inventory and cost of goods sold. What do you notice about the answers you found for each method?
Solution
a.
Elsa's Boards
FIFO Method
FIFO Method
Elsa's Boards
LIFO Method
LIFO Method
b.
FIFO Method
Required sum of ending inventory and cost of goods sold = $12,324 + $2,100 = $14,442
LIFO Method
Required sum of ending inventory and cost of goods sold = $12,502 + $1,940 = $14,442
We notice that sum of ending inventory and cost of goods sold is same for both methods