Question

Accounting for inventory using the perpetual inventory system—

FIFO, LIFO, and weighted-average, and comparing FIFO, LIFO, and weighted-average Steel Mill began August with 50 units of iron inventory that cost \(35 each. During August, the company completed the following inventory transactions:

Units Unit Cost Unit Sales Price

Aug. 3 Sale 45 \) 85

8 Purchase 90 $ 54

21 Sale 85 88

30 Purchase 15 58

Requirements

4. Determine the company’s cost of goods sold for August using FIFO, LIFO, and weighted-average inventory costing methods.

Short answer

The COGs under FIFO, LIO, and average cost methods are - $6070, $6165, and $6,080 respectively.

Step-by-step solution

Step-by-Step-SolutionStep 1: Cost of goods sold

The cost of goods sold is the cost of issuing stock valued under the four methods namely – FIFO, LIFO, Average cost, and specific identification method. These methods match the issuing stock’s price with the older, most recent, or on average cost.

Computed Cost of goods sold under the three methods

The cost of goods sold or each method has been computed in the previous subparts. The list of COGS under the three methods is as follows –

Method	COGS
FIFO	$6,070
LIFO	$6,165
Weighted Average Method	$6,080