FIFO Inventory Calculation

Click here to review an illustrated example of the FIFO calculation. The steps illustrated in the example are recapped below.

1. Start with beginning inventory.

2. Add a layer for each purchase made.

3. Record cost of merchandise sold as sales occur and adjust layers.

4. Compute the ending inventory for the period.

Below is the data for the month of January, 2011.

1/1 Beg. Inv.	180 Units @ $9
1/8 Purchase	110 Units @ $11
1/14 Sale	144 Units
1/22 Purchase	110 Units @ $6
1/25 Sale	91 Units

Compute the FIFO layers amounts for the cost of merchandise available for sale after each purchase and sale.

After 1/8 Purchase

Layer 1 units $ price per unit $ value of the layer

Layer 2 units $ price per unit $ value of the layer

After 1/14 Sale

Layer 1 units $ price per unit $ value of the layer

Layer 2 units $ price per unit $ value of the layer

After 1/22 Purchase

Layer 1 units $ price per unit $ value of the layer

Layer 2 units $ price per unit $ value of the layer

Layer 3 units $ price per unit $ value of the layer

After 1/25 Sale

Layer 1 units $ price per unit $ value of the layer

Layer 2 units $ price per unit $ value of the layer

Layer 3 units $ price per unit $ value of the layer

Based on your answers above, complete the worksheet below.

FIFO Inventory Worksheet for Month Ending January 2011		Purchases		Cost of Merchandise Sold	Inventory Balance
1/1 Beg. Inv.	180 Units @ $9				1,620
1/8 Purchase	110 Units @ $11	$			$
1/14 Sale	144 Units			$	$
1/22 Purchase	110 Units @ $6	$			$
1/25 Sale	91 Units			$	$
Total		$		$	$