ACCT 460 Harvard University FIFO and LIFO Methods Worksheet

LearningIA 18-3. Review of perpetual and periodic, FIFO, LIFO, and average methods. A business
prepares monthly financial statements, and its inventory information for the month of
November is presented here. In this problem, you can complete either or both Part I and Part II
below, according to your assignment.
Inventory Information
November
1
5
11
15
Beginning inventory
Sale
Purchase
Sale
Purchase
Sale
Purchase
20 units @ $20
15 units
10 units @ $22
5 units
20 units @ $25
18 units
10 units @ $27
21
23
27
Part I: Periodic method calculations
Instructions:
a. Calculate cost of goods available, ending inventory, and cost of goods sold using the periodic
inventory method. Prepare a comparison table in the following format:
FIFO
LIFO
Average
Cost of Goods Available
Less: Ending Inventory
Cost of Goods Sold
b. After completing the table, use the formula BI + net P – EI = C of GS to verify the cost of
goods sold amount.
c. Identify the FIFO, LIFO, and average differences in cost of goods sold and ending inventory.
What is the reason for the differences?
Part II: Perpetual method calculations
Instructions:
c. Use the following format to prepare a table using the perpetual inventory method for FIFO,
LIFO, and average cost methods. Round average cost to three places and round final answer
to nearest cent.
Date
Purchase
Cost of Goods Sold
Inventory
the ending inventory amount.
c. Calculate final totals for each column and use the formula BI + net P – EI = C of GS to verify
What is the reason for the differences?
d. Identify the FIFO, LIFO, and average differences in cost of goods sold and ending inventory.
of goods sold between the perpetual and periodic methods.
e. If you completed Part I, identify and explain any differences for FIFO, LIFO, and average cost