Hey everyone. In this video we're going
to be doing FIFO
for the delta company, so it's the exact
same problem it's just we're using a
different method for inventory costing,
uh so you're going to see a lot of
simulators, so much so that I'm just
going to go ahead and put the initial
to journal entries because they're the
exact same. It doesn't matter what method
you use for inventory costing
the journal entries for the inventory
being purchased doesn't change
the only thing it really changes is the
cost of goods sold entry
as you'll see in a minute. So now let's
get into it we're
now down to december 20th where we sell
29 at 50. I'm going to go ahead and put
my journal entry that I know
is going to be cash sales revenue cost
of goods sold in
inventory I'm not going to worry about
the numbers because I'm going to
calculate those in a minute
I just want to go ahead and set myself
up with what I already know.
So now let's get into the sales revenue
side sales revenue is not going to
change
sales revenue is what we sold for
however much we sold it for
uh so we sold 29 at 50 a piece
that's going to remain at 1450, so again
I'm just going to put that up there this
is the same.
So notice everything up to this point
has been the same
if you looked at this from the specific
identification that you you just watched
hopefully
um not too long ago. This up to this
point is the same
the only difference is the number that
you put next to cogs
and inventory as well as the gross
profit in the ending inventory changes
as well but
for journal entry purposes that's the
only thing it changes.
So now let's try to go into figuring out
okay what is our cogs
using FIFO and so we need to know how
many we're going to expense well we sold
29, so that's how many we're going to
expense
29 units, and that paragraph that talks
about
six units came from then that's
irrelevant now because I don't care
where they came from
I'm assuming that the first ones that I
purchased
are going to be the first ones to leave.
So if I have to
expense 29 of them then the first place
I'm going to look is the very first
place that I had some which is the
beginning inventory
and I'm going to take all nine of those.
So 9
at 25 that's going to give me 225
and again just like I did with the
specific specific identification
I'm going to put a little slash through
the nine the only difference is I don't
have any more of those
because I've used all nine of them but I
haven't hit 29 units yet, so the next
place I'm gonna go is the next step down
or the next purchase
which is the 16, and of those 16 I'm
going to take all 16
at 27 that's going to give me 432,
again I'm a little slash mark next
through or next to or
through I should say 16 purchases
because I don't have any of those
anymore
I've got zero of those. Now of the ones
that I've expensed so far
9 and the 16 that's only given me 25 I
still need four more,
so the place that I'm going to draw from
next is the next purchase
and I'm going to pull four of those
that's going to give me my 29 and those
four are going to be 30,
a piece multiply that out that's going
to give me 120,
put a little slash through 22 because I
don't have 22 anymore remember we took
four of those so that's going to leave
me 18.
Now I can add up all of the 29 units
that I have expensed
that's going to give me a total of 777,
that's my cogs for
doing it the FIFO method so I will put
77 or 777
next to cogs and inventory my journal
entry and now I can go into finishing
up what the problem asks for computing
cogs, well we've already said at 777.
Computing gross profit we know again
gross profit is sales revenue minus cogs
so my sales revenue is one thousand four
fifty my cogs is 777,
so if I subtract that out that's going
to give me a gross profit of
673, that's my gross profit.
Last thing I need to have is my ending
inventory, I only really have to look for
one place in ending inventory because
that's the only inventory I have left
which is from the last purchase so my
ending inventory is going to be those
remaining 18
from the october purchase at 30 dollars
a piece,
so if I multiply that out that's going
to give me 550.
So hopefully this made sense hopefully
this was uh pretty straightforward
I've found that students tend to like
the FIFO,
LIFO specific notification
methods and such because they're pretty
straightforward. So hopefully this made
sense
hopefully you enjoyed it but you take
care.