Learning Objective $05-$P$1$: Compute inventory in a perpetual system using the methods of specific identification, FIFO, LIFO, and weighted average.

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Periodic inventory systems allocate the cost of goods available for sale between cost of goods sold and ending inventory at the end of a period. Specific identification and FIFO give identical results whether the periodic or perpetual system is used. LIFO assigns costs to cost of goods sold assuming the last units purchased for the period are the first units sold. The weighted average cost per unit is computed by dividing the total cost of beginning inventory and net purchases for the period by the total number of units available. Then, it multiplies cost per unit by the number of units sold to give cost of goods sold.

FIFO Method

Knowledge Check $01$

Assume that we use a perpetual inventory system and that five identical units are purchased at the following dates and costs:

April $5$ $ $10$

April $10$ $ $12$

April $15$ $ $14$

April $20$ $ $16$

April $22$ $ $17$

One unit is sold on April $25.$ The company uses the first$-$in$,$ first$-$out $($FIFO$)$ inventory costing method.

Identify the cost of the ending inventory on the balance sheet.