🔰 Beginning Inventory (May 31):
-
100 units @ $10 = $1,000
📦 Purchases:
| Date | Quantity | Unit Cost | Total Cost |
|---|---|---|---|
| June 5 | 200 | $11 | $2,200 |
| June 20 | 150 | $12 | $1,800 |
💵 Sales:
| Date | Quantity Sold |
|---|---|
| June 10 | 150 units |
| June 25 | 200 units |
📦 Physical Inventory on June 30:
-
100 units
➕ Total Available Before Sales:
| Date | Units | Cost per Unit | Total Value |
|---|---|---|---|
| May 31 | 100 | $10 | $1,000 |
| June 5 | 200 | $11 | $2,200 |
| June 20 | 150 | $12 | $1,800 |
| Total | 450 | $5,000 |
📘 A. FIFO Under Periodic Inventory
FIFO assumes oldest costs sold first, but applies this only at period-end.
Total sold during June = 150 + 200 = 350 units
Ending Inventory = 100 units (from most recent purchases)
🔢 Step 1: Ending Inventory (from newest costs)
To assign cost to 100 remaining units:
-
100 units from June 20 @ $12 = $1,200
✅ Ending Inventory = $1,200
🔢 Step 2: COGS
COGS = Total Goods Available – Ending Inventory
= $5,000 – $1,200 = $3,800
📗 B. FIFO Under Perpetual Inventory
Here, inventory and COGS are updated after each sale, using FIFO at the time of sale.
📍 Before June 10 Sale
Inventory:
-
100 @ $10 = $1,000
-
200 @ $11 = $2,200
Total: 300 units, $3,200
📍 June 10: Sold 150 units
Sold using oldest costs:
-
100 @ $10 = $1,000
-
50 @ $11 = $550
COGS = $1,550
Remaining inventory:
-
150 @ $11 = $1,650
📍 June 20 Purchase
-
150 units @ $12 = $1,800
Inventory now:
-
150 @ $11 = $1,650
-
150 @ $12 = $1,800
Total: 300 units, $3,450
📍 June 25: Sold 200 units
FIFO pulls:
-
150 @ $11 = $1,650
-
50 @ $12 = $600
COGS = $2,250
Remaining inventory:
-
100 @ $12 = $1,200
✅ Ending Inventory = $1,200
✅ Total COGS = $1,550 (June 10) + $2,250 (June 25) = $3,800
✅ Final Comparison
| Periodic FIFO | Perpetual FIFO | |
|---|---|---|
| Ending Inventory | $1,200 | $1,200 |
| COGS | $3,800 | $3,800 |
They Match!
Yes — in this specific scenario, even though sales were spread out, FIFO gave identical results.