1. CHAPTER NINETEEN APPENDIX
PERPETUAL INVENTORY:
LIFO AND MOVING-AVERAGE METHODS

2. PERPETUAL INVENTORY METHODS
Costs are computed every time merchandise is purchased or sold.
FIFO - covered in chapter 19
LIFO -
When inventory is sold, we assume that the most recently purchased layer is sold first.
MOVING-AVERAGE -
Every time inventory is purchased, a new average cost per unit is calculated.

3. There are 200 units in inventory at the beginning of the year.
PERPETUAL LIFO METHOD
Date
Purchases
Cost of Goods Sold
Cost/
Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
There are 200 units in inventory
at the beginning of the year.

4. PERPETUAL LIFO METHOD Cost of Goods Sold Inventory on Hand Cost/
Cumulative
Cost/
Layer
Units
Unit
CGS
CGS
Layer
Units
Unit
Cost
Total
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
$200.00

5. PERPETUAL LIFO METHOD Date Purchases Cost of Goods Sold Cost/ Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450

6. PERPETUAL LIFO METHOD Cost of Goods Sold Inventory on Hand Cost/
Cumulative
Cost/
Layer
Units
Unit
CGS
CGS
Layer
Units
Unit
Cost
Total
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
$200.00
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
(4)
300
1.50
450.00
$650.00

7. PERPETUAL LIFO METHOD Sold 400 units Date Purchases Cost of Goods Sold
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450
June 20
Sold 400 units

8. PERPETUAL LIFO METHOD LIFO starts with the most recently purchased…..
Cost of Goods Sold
Inventory on Hand
Cost/
Cumulative
Cost/
Layer
Units
Unit
CGS
CGS
Layer
Units
Unit
Cost
Total
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
$200.00
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
(4)
300
1.50
450.00
$650.00
LIFO starts with the most recently purchased…..
Layer 4 completely sold, layer 3 completely sold,
layer 2 80 sold

9. PERPETUAL LIFO METHOD Date Purchases Cost of Goods Sold Cost/ Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450
June 20
300
$1.50
$450 20
1.20 24 80
1.00 80
$554.00

10. PERPETUAL LIFO METHOD Cost of Goods Sold Inventory on Hand Cost/
Cumulative
Cost/
Layer
Units
Unit
CGS
CGS
Layer
Units
Unit
Cost
Total
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
$200.00
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
(4)
300
1.50
450.00
$650.00
300
$1.50
$450
(1) 20
$ .80
$ 16.00 20
1.20 24
(2) 80
1.00
80.00 80
1.00 80
$554.00
$96.00

11. PERPETUAL LIFO METHOD Date Purchases Cost of Goods Sold Cost/ Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450
June 20
300
$1.50
$450 20
1.20 24 80
1.00 80
$554.00
June 30
100
$1.80
$180

12. PERPETUAL LIFO METHOD Cost of Goods Sold for June Cost of Goods Sold
Inventory on Hand
Cost/
Cumulative
Cost/
Layer
Units
Unit
CGS
CGS
Layer
Units
Unit
Cost
Total
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
$200.00
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
(4)
300
1.50
450.00
$650.00
300
$1.50
$450
(1) 20
$ .80
$ 16.00 20
1.20 24
(2) 80
1.00
80.00 80
1.00 80
$554.00
$96.00
(1) 20
$ .80
$ 16.00
Cost of Goods
Sold for June
(2) 80
1.00
80.00
(5)
100
1.80
180.00
$276.00

13. PERPETUAL LIFO METHOD June 30 Ending Inventory Cost of Goods Sold
Inventory on Hand
Cost/
Cumulative
Cost/
Layer
Units
Unit
CGS
CGS
Layer
Units
Unit
Cost
Total
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
$200.00
(1) 20
$ .80
$ 16.00
(2)
160
1.00
160.00
(3) 20
1.20
24.00
(4)
300
1.50
450.00
$650.00
300
$1.50
$450
(1) 20
$ .80
$ 16.00 20
1.20 24
(2) 80
1.00
160.00 80
1.00 80
$554.00
$96.00
(1) 20
$ .80
$ 16.00
(2) 80
1.00
160.00
June 30
Ending Inventory
(5)
100
1.80
180.00
$276.00

14. PERPETUAL MOVING-AVERAGE METHOD
Date
Purchases
Cost of Goods Sold
Cost/
Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
There are 200 units in inventory
at the beginning of the year.

15. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
Cost / # of units
$200/200 = $1/unit

16. PERPETUAL MOVING-AVERAGE METHOD
Date
Purchases
Cost of Goods Sold
Cost/
Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450

17. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
$200 in inventory +
$450 just purchased =
$650

18. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
200 units in inventory +
300 just purchased = 500

19. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
1.300
$650/500units = $1.30/unit

20. PERPETUAL MOVING-AVERAGE METHOD
Date
Purchases
Cost of Goods Sold
Cost/
Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450
June 20
400
$1.30
$520
$520.00
Cost of the units sold is the $1.30/unit

21. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
1.300
400
$1.30
$520
$520.00
(520)
130.00
100
1.300
Cost per unit is still $1.30

22. PERPETUAL MOVING-AVERAGE METHOD
Date
Purchases
Cost of Goods Sold
Cost/
Cost/
Cumulative
Units
Unit
Total
Units
Unit
CGS
CGS
Jan. 1 (BI)
June 4
300
$1.50
$450
June 20
400
$1.30
$520
$520.00
June 30
100
1.80
180

23. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
1.300
400
$1.30
$520
$520.00
(520)
130.00
100
1.300
180
A purchase….need to calculate
new per unit cost

24. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
1.300
400
$1.30
$520
$520.00
(520)
130.00
100
1.300
180
310.00
200
1.550
$310/200units = $1.55/unit

25. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
1.300
400
$1.30
$520
$520.00
(520)
130.00
100
1.300
180
310.00
200
1.550
June’s Cost of Goods Sold

26. PERPETUAL MOVING-AVERAGE METHOD
Cost of Goods Sold
Inventory on Hand
Cost of
Cost of
Average
Cost/
Cumulative
Purchase
Inventory
Units
Cost/
Units
Unit
CGS
CGS
or (Sale)
on Hand
on Hand
Unit $
200
$1.000
$450
650.00
500
1.300
400
$1.30
$520
$520.00
(520)
130.00
100
1.300
180
310.00
200
1.550
June 30 Ending Inventory