Derivative corporation which uses perpetual inventory system...

Derivative Corporation which uses perpetual inventory system has the following inventory purchases and sales data for the month of January, 2023 ## Given Data: ### Inventory Purchases: - **January 1:** 300 Units @ $5 - **January 8:** 450 Units @ $4 - **January 14:** 250 Units @ $6 - **January 19:** 100 Units @ $4 -**January 25:** 100 Units @ $6 ### Sales: - **January 10:** 500 Units @ $20 - **January 17:** 200 Units @ $20 - **January 23:** 200 Units @ $20 Required: a) Compute the cost of goods sold under the FIFO (First-In, First-Out) and LIFO (Last-In, First-Out). b) Compute the cost of inventory on hand at January 31, 2023 under the FIFO (First-In, First-Out) and LIFO (Last-In, First-Out).

Transcript

0:00 Hello everyone.

00:01 So the question says that prepare comparative condensed income statements for 2022 under fifo and lefo.

00:09 So condensed income statement for the year ended december 31st 2022.

00:43 One column will be for fifo and the other one will be for lifo.

00:51 So firstly we'll take sales revenue that is given to us as $750 for both then we'll calculate cost of goods sold in this firstly we'll take beginning inventory that is $35 ,000 for fifo as well as for lifo next we'll take purchases that is $468 ,000 $500 for both.

02:04 Now with this we can calculate our cost of goods available for sale.

02:20 How we'll calculate this? so we'll take beginning inventory plus purchase.

02:29 So we get $503 ,500 in both.

02:40 Now coming to next that is we'll deduct ending inventory.

02:52 Now, for ending inventory we'll make a working note over here so firstly we'll calculate ending inventory that is 10 ,000 plus 120 ,000 minus 98 ,000 that gives us 32 ,000.

03:27 Now cost of ending inventory in fifo is equals to 25 ,000 units purchase on november 20 plus 7 ,000 units on august 15 because first in first out so we get 25 ,000 plus 4 .20 plus 7 ,000 sorry over there we'll multiply it by 4 .20 and 7 ,000 multiplied by 3 .90.

04:40 This gives us 132 ,300.

04:47 Similarly talking about cost of ending inventory in leifo.

05:09 So it will be 22 ,000 units purchased on may 10 plus 10 ,000 units from beginning inventory because last in first out so it will be 22 ,000 multiplied by 3 .70 dollars plus 35 ,000 this gives 116 ,400 dollars...

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