M7-19 (Supplement 7A) Calculating Cost of Goods Sold and Ending Inventory under FIFO and LIFO (Perpetual Inventory) [LO 7-S1] 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 perpetual 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           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.

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.