Aircard Corporation tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each period as if it uses a periodic inventory system. The following are the transactions for the month of July.

Units Unit Cost
July 1 Beginning Inventory 2,700 $47
July 5 Sold 1,350
July 13 Purchased 6,700 51
July 17 Sold 3,700
July 25 Purchased 8,700 57
July 27 Sold 5,700

Required:
Calculate the cost of ending inventory and cost of goods sold assuming a perpetual inventory system is used in combination with (a) FIFO and (b) LIFO.

Answer:

Aircard Corporation

Perpetual Inventory System

                                        FIFO           LIFO

Ending Inventory =     $418,950     $387,450

Cost of goods sold = $545,550    $577,050

Explanation:

a) Data and Calculations:

Date      Transactions             Units   Unit Cost  Total          

July 1     Beginning Inventory 2,700       $47      $126,900

July 5    Sold                           (1,350)                                      

July 13   Purchased                6,700          51        341,700    

July 17   Sold                          (3,700)                                          

July 25 Purchased                 8,700         57       495,900

July 27 Sold                          (5,700)  

July 31  Total available         18,100                   $964,500

July 31  Total units sold     (10,750)                

July 31  Ending Inventory     7,350                  

FIFO:

Cost of Ending Inventory

Date      Transactions             Units   Unit Cost  Total          Balance

July 1     Beginning Inventory 2,700       $47      $126,900   $126,900

July 5    Sold                           (1,350)                                       $63,450

July 13   Purchased                6,700          51        341,700      405,150

July 17   Sold                          (3,700)                                       221,850

July 25 Purchased                 8,700         57       495,900      717,750

July 27 Sold                          (5,700)                                        418,950

Ending Inventory = $418,950

Cost of goods sold = $545,550 ($964,500 -$418,950)    

LIFO:

Cost of Ending Inventory

Date      Transactions             Units   Unit Cost  Total          Balance

July 1     Beginning Inventory 2,700       $47      $126,900   $126,900

July 5    Sold                           (1,350)                                       $63,450

July 13   Purchased                6,700          51        341,700      405,150

July 17   Sold                          (3,700)                                       216,450

July 25 Purchased                 8,700         57       495,900     712,350

July 27 Sold                          (5,700)                                       387,450

Ending Inventory = $387,450

Cost of goods sold = $577,050  ($964,500 -$387,450)      

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Sales revenue $470,000
Cost of goods sold $410,000
Operating expenses $70,000
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§1231 gains $900
Charitable contributions $300
Municipal bond interest $300
Salary paid as a guaranteed payment to Deanne (not included in expenses) $3,000
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Your 3-5 sentence summary: