FIFO METHOD Formula

Q: WHAT IS THE FORMULA FOR FIFO METHOD WHEN CALCULATING THE VALUE OF THE CLOSING INVENTORY?



A:
The answer to this question has been brilliantly answered further below by Shivam, who has made use of a nice example to show us the FIFO Method formula and how it works.

Well done and thank you for enlightening fellow accountants around the world!


Related Questions & Tutorials:
Return to the main tutorial on FIFO and LIFO Accounting and the Weighted Average Cost Method

Comments for FIFO METHOD Formula

Click here to add your own comments

Inventory Valuation
by: Anonymous

I am grateful for this kind of opportunity. I thank you for a good job, well done.

Pls I still find it difficult to understand the way the methods are used, especially in forming the table. I want to ask if there is a way to make it simpler using the FIFO, LIFO and average methods. Kindly do it please to help me understand, thank you.

Hi there, the best thing is to check out my full tutorial on Inventory Accounting Methods: FIFO and LIFO Accounting, Weighted Average Method. The tutorial includes a full example for each of the inventory methods.

Good luck!

Best,
Michael
Founder of Accounting Basics for Students

layout format
by: Anonymous

i am very much worried about the layout formats of these stock valuation methods because what i just saw is that they look almost the same, so if you can further distinguish format for the three please

FIFO Method Formula
by: Shivam Shrivastava

The formula is very simple...

You calculate the total closing stock [(purchases + opening stock in quantity) - total issued in quantity] * Rate of last purchases.

Example:
01-01-2014 OPENING STOCK 250 UNITS @ $20 each.
05-01-2014 Purchased 500 units @ $25 each.
07-01-2014 Issued 300 units
10-01-2014 Purchased 600 units @ $18 each
15-01-2014 Issued 1000 units.

VALUE OF CLOSING STOCK:
Total purchases + opening stock = 1350 Units
Total issued = 1300 Units

So, REMAINING UNITS = 50 Units

Value of remaining units
= 50 * Rate of last purchase
= 50 * $18
= $900

Click here to add your own comments

Return to Ask a Question About This Lesson!.













© Copyright 2009-2020 Michael Celender. All Rights Reserved. 
Click here for Privacy Policy.

Search this Site:



privacy policy