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Female Narrator: Welcome back
to another Lions and Tigers video.
We're continuing with a case from last week.
This time, Jason calls and says, hey, it's too hard to keep track
of that inventory method and can you give me some other options?
So we're gonna meet with him, but before we do,
we need to show and do all of the calculations,
so we're ready.
So the first thing that I ask you to do
is to do perpetual FIFO, LIFO, and average.
So let's go ahead and get right in on the FIFO.
The first thing that you have to do
is you have to go ahead and finish the schedule
that we're going to always use when we do perpetual.
So we have a column for what we purchased.
So the first thing we did
is we purchased 10 units at 5 for a total of $50,
so now, we have 10 at 5 for a total of 50.
I find it's easier to keep track of this
if you draw a line every time you have a transaction,
so you can see where you're going.
Then on the 5th, we sold 8 units.
Well, we only have one layer to take from,
so they must've cost me 5-- or a total of $40.
I had 10.
I sold 8, so I must have 2 left at 5--or a total of $10.
Now on the 10th, remember, I bought some more leashes.
This time, I bought 12 at a cost of 6--
or a total of $72.
This is where it's really important
to keep these inventory layers in the proper order,
so I need to list what I had first.
I had 10 units at 5,
and now, I'm adding 12 units at 6.
So my balance is $82, because remember,
under perpetual, we have to keep
a running balance of our inventory
at every single step of the way.
So there's that layer.
Now on the 15th, I'm going to sell some inventory.
I am using FIFO-- first in, first out.
So because I'm using FIFO,
I have to use up these layers first
before I dip into the next layer.
I sold 6, so 2 and 4 gives me my 6.
I sold 2 from this layer at 5,
and these 4 had to come from this layer--or 6.
So 2 times 5 is 10, 4 times 6 is 24,
add 'em together, I have a cost of $34.
I sold all of this layer.
That layer's gone, and I sold some of this layer.
So I have left 8 at 6-- or $48.
Draw a line for another layer.
On the 22nd, I bought another 15 leashes.
This time, I paid 7 for them-- or 105--
so now, I have 8 at 6, 15 at 7.
Notice, I'm keeping these layers in the proper order.
This layer is worth 153.
My last transaction for FIFO was on the 28th.
I sold 9 units.
I have to go from here first, so I sold 8 at 6.
But I've sold 9, so I have to take 1 from here.
So 1 at 7, this is a total of $55.
Now, I have 14...remember, I used some of those.
I only have 14 left at 7-- or 98.
So this is my ending inventory,
because remember, perpetual, I keep a running total.
My cost of goods sold is 40, plus 34, plus 55,
so my total cost of goods sold for the month would be 129.
That is FIFO inventory.
Now, next, we're going to do LIFO.
Now, LIFO's going to start off the same way,
because we didn't have any layers until we got to the 10th.
So go ahead and pause and fill those in.