Inventory Accounting: FIFO, LIFO, Weighted Average & Valuation

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Allocate the units Cedar & Pine Outfitters sold in 2026 to its cost layers, oldest first, and work out FIFO cost of goods sold, ending inventory and gross margin.
• Value the same backpacks with LIFO, newest layer first, and measure the LIFO reserve against FIFO.
• Build the landed cost of each jacket purchase from list price, trade discount and freight-in, then value COGS and ending inventory at weighted average cost.
• Keep a perpetual stock card for camp stoves: every sale is costed at the current average, every purchase updates the average.
• Put the three cost formulas side by side for the backpacks and chart how each one changes gross profit and income tax.
• Test six product lines for a write-down to net realisable value, see how a group test hides losses, and book the write-down and its later partial reversal.
• Compare the year-end count with the perpetual records, separate an unrecorded receipt from real shrinkage, and book both.
• Measure how fast each category of Cedar & Pine Outfitters sells its stock and how much gross margin every dollar of inventory earns.