COB 241 Lecture Notes - Lecture 10: Fifo (Computing And Electronics), Weighted Arithmetic Mean, Income Statement
25 Oct 2016
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Inventory purchased balance sheet as inventory is sold, the revenue is recorded and the cost of inventory is expensed on the income statement at cogs revenues matched with the cost of sales income statement. Sale of 30 units 30 @ = ,000. Sale of 65 units 40 @ , 20 @ , 5 @ = ,925. Check by: cogs + ending balance = cost of goods available for sale. Sale of 65 15 @ , 20 @ , 30 @ . **lower net income because lowest prices not used** Cost of goods available for sale = beginning inventory + purchases = ,725. Units available for sale = 70 + 20 + 40 = 135 units. Fifo: higher ending inventory, lower cogs, leading to a higher net income. Lifo: lower ending inventory, higher cogs, leading to a lower net income.
