Periodic vs Perpetual with LIFO method of cost inventory?

Question

Nest Co. recorded the following inventory information during the month of January:

Units Unit Cost Total Cos Units on Hand
Balance on 1/1 2,000 $1 $2,000 2,000
Purchased on 1/8 1,200 $3 $3,600 3,200
Sold on 1/23 1,800 1,400
Purchased on 1/28 800 $5 $4,000 2,200

Nest uses the LIFO method to cost inventory. What amount should Nest report as inventory on January 31 under each of the following methods of recording inventory?

Perpetual Periodic
a) 2,600 5,400
b) 5,400 2,600
c) 2,600 2,600
d) 5,400 5,400

Answer 1

The answer is (b) 5,400 (perpetual); 2,600 (periodic)

Under perpetual LIFO, when 1800 were sold, 1200 was from the batch purchased on 1/8 and the bal. 600 from the beginning bal., leaving 1400 from the beginning bal. at $1 = $1,400. Add to that the batch purchased after the sale, on 1/28 $4,000, and you get $5,400.

Under periodic LIFO, you do the exercise at the end of the month, so of the 2,200 units left in ending inventory, 2,000 came from the beginning bal. at $1 each = $2,000, and the bal. 200 units were from the batch purchased on 1/8 at $3 each = $600, giving an ending inventory of $2,600.

Under LIFO you assume that the latest purchases were sold off first.

Answer 2

Periodic Vs Perpetual

Answer 3

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RE:
Periodic vs Perpetual with LIFO method of cost inventory?
Nest Co. recorded the following inventory information during the month of January:

Units Unit Cost Total Cos Units on Hand
Balance on 1/1 2,000 $1 $2,000 2,000
Purchased on 1/8 1,200 $3 $3,600 3,200
Sold on 1/23 1,800 ...

Answer 4

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