Effects of FIFO and LIFO
Sheepskin Company sells to colleges and universities a special paper that is used for diplomas. Sheepskin typically makes one purchase of the special paper each year on January 1. Assume that Sheepskin uses a perpetual inventory system. You have the following data for the 3 years ending in 2019:
Required:
1. What would the ending inventory and cost of goods sold be for each year if FIFO is used?
2. What would the ending inventory and cost of goods sold be for each year if LIFO is used?
3. CONCEPTUAL CONNECTION For each year, explain the cause of the differences in cost of goods sold under FIFO and LIFO.
(a)
Inventory costing methods:
FIFO and LIFO are those methods which are used for calculation of closing inventory and cost of goods sold.
The cost of ending inventory and the cost of goods sold using the FIFO.
The given information is as follows:
Total available units are:
In the year
In the year
Opening Inventory
In the year
Opening Inventory
Calculation of Closing Inventory as per FIFO Method:
Under this method, which material purchased first, issued first for production
(b)
Inventory costing methods:
FIFO and LIFO are those methods which are used for calculation of closing inventory and cost of goods sold.
The cost of ending inventory and the cost of goods sold using the LIFO.
(c)
Inventory costing methods:
FIFO and LIFO are those methods which are used for calculation of closing inventory and cost of goods sold.
The reason for difference in cost of goods sold under both methods.
Accounting Information Systems
Corporate Financial Accounting
Financial & Managerial Accounting
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Principles of Economics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Fundamentals of Financial Management (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Principles of Microeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
Probability and Statistics for Engineering and the Sciences
Foundations of Business (MindTap Course List)
Financial And Managerial Accounting
Fundamentals of Information Systems
Fundamentals of Information Systems
Principles of Information Security (MindTap Course List)
A Guide to SQL
Database Systems: Design, Implementation, & Management
Database Systems: Design, Implementation, & Management
Principles of Information Systems (MindTap Course List)
Automotive Technology: A Systems Approach (MindTap Course List)
Principles of Information Systems (MindTap Course List)
Fundamentals of Geotechnical Engineering (MindTap Course List)
Precision Machining Technology (MindTap Course List)
Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
Mechanics of Materials (MindTap Course List)
Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)
Management Of Information Security
International Edition---engineering Mechanics: Statics, 4th Edition
Electric Motor Control
Principles of Geotechnical Engineering (MindTap Course List)
EBK ELECTRICAL WIRING RESIDENTIAL
Solid Waste Engineering
Fundamentals of Chemical Engineering Thermodynamics (MindTap Course List)
Automotive Technology
Steel Design (Activate Learning with these NEW titles from Engineering!)
Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)
Network+ Guide to Networks (MindTap Course List)
Structural Analysis