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Female Narrator: Okay, now,
we are doing periodic...
LIFO.
And as I mentioned in the last session,
we are not keeping track of inventory as we go.
We're looking back to calculate our cost of goods sold,
because remember,
we throw everything in purchases under periodic.
So Step 1 is to calculate our goods available for sale.
We're going to take 10 units that we purchased at 5,
and we had $50.
Then, we purchased another 12 at 6 for a total of 72.
Then, we purchased 15 units at 7 for a total of 105--
37 units at a total of $227.
That is our goods available for sale.
We sold 23 units...
and we got that by adding up the 8, plus the 6, plus the 9
that were sold in the month of, um...January.
We also may wanna know what our ending inventory was.
If we had 37 units purchased, and we sold 23,
then we must have 14 left in ending inventory.
Now, we didn't have
any beginning inventory in this problem,
but if you did, you would need to list that.
Okay?
So...let's go ahead and do...
there's three different calculations that you should do.
You can do them in any order that you want.
I like to do cost of goods sold first.
Now, I am dealing with LIFO-- last in, first out--
so this time, I need to start down here and move up.
So I sold 15 units at 7 for a total of 105.
But I sold 23 units, so I have another 8 units
that I need to take out of this layer.
So 8 at 6-- or a total of 48.
Okay?
So 15 plus 8 equals 23 units sold;
105, plus 48, equals a total of 153.
I sold last in, first out.
Now, we can do our calculation for ending inventory.
Under LIFO, my inventory will consist of my oldest stuff,
so that's up here.
So I have 10 at 5, which equals 50,
and I have how many at 12?
I have 4 at 12... or I'm sorry, 4 at 6.
Because I had 12, I sold 8, I only have 4 left,
so 4 times 6 is 24.
So I have 74, and I have 14 units.
Now let's check my work.
Remember the formula we learned?
And what was that?
Goods available for sale, minus ending inventory,
equals cost of goods sold.
So I had 37 units available for sale at a total of 227.
I have ending inventory of 14 units at 74,
so I have a cost of goods sold of 23 units at $153.
I made sure I balanced.
So you need to make sure that when you're doing these
that you're double-checking your work.
I also wanna point out one other odd thing.
Look at my LIFO-- $153 was my cost of goods sold.
Under perpetual, how come that's a different number?
Well, it's a different number, because under LIFO,
it matters at what point we apply last in, first out.
Under FIFO, it doesn't,
so FIFO perpetual and FIFO periodic
will give you the same answer.
LIFO perpetual and LIFO periodic will give you different answers.