What are Intermittent Purchase and Sell? 

Intermittent FIFO Example

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Hey everyone. In this video we are

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going to be doing again

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more FIFO LIFO and weighted average

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uh examples, but this one I want you to

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notice something a little bit different.

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So the last ones that we've been doing

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with the FIFO LIFO, weighted average

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and si2 is

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that everything in the company's

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lifecycle has been I'm going to purchase

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some inventory I want to purchase some

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more inventory I'm going to purchase

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more inventory and then at the very end

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of the year I'm going to sell everything

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that I have at that time or at least as

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much as I can,

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so it's a lot of purchase purchase

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purchase and then one final big sale,

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but we know most companies don't work

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like that

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we know that they're gonna most

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companies are out there gonna go you

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know purchase some

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sell some purchase some more sell some

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more purchase more maybe purchase a

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little bit more than sell some more

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but they have this intermittent

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purchases and sales, and so I want to

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show you

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how to do LIFO FIFO and weighted average

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using intermittent purchases and sales

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so you have

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you know a overall look on how to do

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these things with different types of

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businesses.

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So if you notice right here echo company

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has the following beginning inventory

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purchases and sales and you notice it

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says

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we have beginning inventory then we have

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purchase and then we sell and we

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purchase more than purchasing more than

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sells more

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and this can go on you know infinite

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amount but I just want to kind of give

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you a quick preview of this or at least

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a quick example of this.

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And then it says I want you to find

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using FIFO,

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the cost of goods sold, the gross profit,

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and the ending inventory for

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this example, so let's get into it let's

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start with the first one the beginning

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inventory. We don't do anything with that

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because remember we don't journalize

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beginning inventories those were

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journalized in the previous year

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and they were carried over to the

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current year so now we're going to start

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with 115 where we purchased some

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inventory, and so our inventory goes up

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our cash goes down

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so we're going to start with 115 as our

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date,

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inventory is going to be our debit and

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if we multiply

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uh 150 times 12 we'll get 1800, and then

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our credit will be cash because again we

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paid for it in cash we're assuming we

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paid for it in cash

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and so cash for 1800, so that takes care

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of the

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115 purchase. Now we get to

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the 4-1 sale and we sold 175

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at 25, so now we're making our first sale

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and this is again how I would go about

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doing it. So I'm going to start with my

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date

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for one and I'm going to go ahead and

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put all the account names

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down, I'm not going to put the numbers

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with them yet I'm just going to go ahead

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and put the count names down so cash I

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know and then sales revenue that's the

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first part of the equation

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and then we have cogs or cost of goods

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sold and inventory, so I know that's my

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debit my credit my debit my credit.

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I'm going to first look at the sales the

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cash and the sales revenue side,

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what did I sell it for and what did I

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earn off of it, so

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in order to do that to start with that

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I'm going to calculate how much I sold

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or what I sold it for. So my sales

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revenue would be the 175 that I sold

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times the 25 dollars I sold it for

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and that would give me 4375

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and that would be my sales revenue and

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my cash, so if I go over to my

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journal entries I'll put those into the

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debit the credit for those appropriately.

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Now also one other thing especially when

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I'm doing intermittent purchases and

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sales I tend to do this just because

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it is going to keep me organized and I'm

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less likely to make a mistake

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and you'll understand this as we

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progress through this but I'm just going

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to put a little slash mark through the

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175,

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I'm done right now with the 175,

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uh I don't need to worry about that

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right now in terms of recognizing more

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and now granted I will still have to

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expense those

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but I don't want to use that as a

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purchase. So

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now let's get into the cost of goods

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sold in inventory I need to expense

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those

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175 that I sold so 175 is the number

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that I need to hit,

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and because we're using FIFO first in

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first out I'm gonna it's more or less a

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top down approach, I'm going to start at

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the top and work my way down until I hit

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175. So the first place I'm going to

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pull from

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is the 50 at the very beginning in our

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beginning inventory

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50 at 10 and if I multiply that out

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that's going to give me

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500. Now I'm also going to put a slash

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mark through that 50

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in a different way in a different

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direction to let myself know I have no

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more of those 50.

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Okay. I still haven't hit 175 yet so

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now I got to take out

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somewhere else I the only place I could

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take out is from the 115 purchase

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and how many of those 150 do I take out

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I need to take out

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125, that will give me 175 total,

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so 125 at 12 that's going to give me a

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total of 2 000,

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now I'm also going to put a little slash

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mark through the 150 purchase because I

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don't have 150 anymore

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I actually have 25 left so I'm gonna put

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myself a little note there it says hey

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don't forget you still have 25 of these.

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Now going back down I need to add up the

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four excuse me the 500 and the 2000

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that's going to give me 2500 and that

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right there is my cogs, my cost of goods

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sold, so I'm going to put that into my

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journal entry

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so 2500 2500 and that takes care of my

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sale.

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All right. Now we can go to the 5-1

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purchase which is the 200 at 15, so I

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can go ahead and do a journal entry for

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that I'll say

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5-1 inventory multiply that together

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that's going to give me 3 000,

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and then again credit cash for the same

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3 thousand.

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All right. That takes care of that

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purchase let's go to the six to purchase

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same thing

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inventory goes up cash goes down I'm

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going to multiply uh

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225 times 16 that's going to give me 

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3600

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same thing with cash 3600. Now we get to

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the sale on 711,

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we sold 430 so I'm going to go ahead and

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put my accounts down,

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so cash sales revenue cost of goods sold

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and inventory and then I'm going to

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start doing the calculations for

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so 7-1. I need to find out first what I

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made in sales revenue and what I

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received in cash,

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so my sales revenue is going to be the

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430 that I sold

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times the 25 dollars I sold them for and

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that's going to give me a total of ten

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thousand

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seven fifty, so I'm gonna go ahead and

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put that in my journal entry

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ten thousand seven fifty, ten thousand

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seven fifty, and then again I'm gonna do

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the same thing I did with the last sale

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I'm gonna put a little slash mark

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through the 430 because again

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I don't want to make a mistake and use

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that as a purchase it's not it was a

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sale.

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All right. Now we're going to go into the

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cost of getting sold I need to figure

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out

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how many or how much I need to expense.

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So

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430 is the number that's my magic number

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that I got to hit,

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where am I going to draw from first, well

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again we're still doing the top down

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approach. So we don't have any more in

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the beginning inventory we still have 25

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in the december excuse me january 15th

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purchase, so I'm going to take all 25 of

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those that'd be the first place I'd pull

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from because that's all I have.

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So 25 at 12

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that's going to give me a total of 300

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and I'm going to put a little slash mark

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through the 25

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because I don't have those anymore. Now

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this is the reason why I put a slash

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mark in a different direction

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on the sales, I don't want you to if you

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didn't have that slash mark over the 175

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I don't want you to go through and make

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a mistake and say hey

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I've got 175 at 25 that I'm gonna

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expense remember that's a sale that's

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not a purchase,

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so I'm gonna go to the next purchase for

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the next uh

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inventory. So the next one will be the

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200 at 15

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and remember I got a hit 430 so I'm

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going to take all 200 of those,

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so 200 at 15 that's gonna give me

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three thousand put a little slash mark

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the other way

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on that 200 because I don't have any

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more of those left,

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and then the last place I'm going to

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pull from is the 6 2 and I'm going to

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pull in order to get to the

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430 I need to still pull 205 out, so 205

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at 16 that's going to give me 3280.

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put a little slash mark through the 225

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because I don't have 225 anymore I only

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have 20 left

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now, so that again gives me my little

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note.

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I'm going to add up the 300, the 3000, and

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the 3280, that's going to give me

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0:07:54.840,0:07:59.280

6580, that is my cogs for this

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transaction,

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so let me put that in my journal entries

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six thousand five eighty, six thousand

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five eighty.

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All right. That takes care of the journal

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entries but remember the question asked

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us to find the cogs, the gross profit,

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ending inventory,

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so let's do that now. Before I get into

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doing that I'm also going to look at I'm

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going to find one other thing too it's

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just going to give me some extra help

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for when I find out the gross profit but

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I want to know my total revenue as well.

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And so when you're finding these total

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revenues or total cogs all we're doing

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is looking at the line items looking at

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our journal entries where it says

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in this situation sales revenue and I'm

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gonna add them up. So I have a sales

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revenue

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at four one of four thousand three

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seventy five, I have one at seven eleven

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of ten thousand seven fifty, if I add

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that up that's going to give me a total

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revenue

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for this year for echo company of

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fifteen thousand

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one twenty five. I'm gonna do the same

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thing for total cogs

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I wanna look at where it says cogs on

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the journal entries at four one and

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seven eleven

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add those up and give me my total cogs

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for the year, so that's going to give me

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a

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2500 plus 6580

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that will give me a total cogs of 9080.

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All right. The next one that they want us

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to find is the gross profit. Now gross

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profit is what we made on the sale

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so it is a the difference between

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what we earned versus what we paid for

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those inventory, so it's revenue minus

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cogs,

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your equation for gross profit is sales

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revenue minus your cogs, so what is our

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total sales revenue? Well it's fifteen

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thousand one twenty five we just found

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it

0:09:26.000,0:09:29.360

what's our total cogs again we just

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found it nine thousand eighty

0:09:29.360,0:09:32.800

if we subtract the two that's going to

0:09:30.640,0:09:35.600

give us a gross profit of six thousand

0:09:32.800,0:09:36.399

forty five. And then finally the last

0:09:35.600,0:09:38.720

thing we need to find

0:09:36.399,0:09:39.680

is the ending inventory. Ending inventory

0:09:38.720,0:09:41.360

is really easy because we've already

0:09:39.680,0:09:44.320

given ourselves that note

0:09:41.360,0:09:45.200

we still have 20 from the 6-2 purchase

0:09:44.320,0:09:47.839

and those 20

0:09:45.200,0:09:49.120

are going to be 16 a piece, so if I

0:09:47.839,0:09:50.240

multiply that out

0:09:49.120,0:09:52.160

that's going to give me an ending

0:09:50.240,0:09:55.360

inventory balance of

0:09:52.160,0:09:56.720

320. Be careful a lot of times when they

0:09:55.360,0:09:58.160

say what what's the ending inventory

0:09:56.720,0:10:00.160

they don't want the quantity because it

0:09:58.160,0:10:01.600

doesn't matter if you use FIFO LIFO or

0:10:00.160,0:10:02.480

weighted average the quantity is still

0:10:01.600,0:10:03.920

going to be the same,

0:10:02.480,0:10:05.839

it's going to be 20 it's just a matter

0:10:03.920,0:10:07.519

of 20 at what so they're looking for

0:10:05.839,0:10:07.839

that price whether it be the price per

0:10:07.519,0:10:10.880

each

0:10:07.839,0:10:12.640

or uh the total amount. So but that's how

0:10:10.880,0:10:14.399

you do an intermittent purchase and sale

0:10:12.640,0:10:15.519

using the FIFO method. So in the next

0:10:14.399,0:10:16.560

video I'm going to show you how to do

0:10:15.519,0:10:22.480

the same thing

0:10:16.560,0:10:22.480

using the LIFO video. Take care.

Intermittent LIFO Example

0:00:01.760,0:00:04.319

All right. Here we are again with the

0:00:03.280,0:00:06.000

same problem,

0:00:04.319,0:00:07.839

still doing intermittent purchases and

0:00:06.000,0:00:09.040

sales but this time they're asking us to

0:00:07.839,0:00:11.440

do the same thing but in

0:00:09.040,0:00:13.679

using the LIFO method, so this is the

0:00:11.440,0:00:15.120

last in first out. So a lot of stuff is

0:00:13.679,0:00:16.400

going to be similar especially with the

0:00:15.120,0:00:17.600

journal entries

0:00:16.400,0:00:20.320

with the purchases they're going to be

0:00:17.600,0:00:22.240

identical, the cash and sales revenues

0:00:20.320,0:00:24.240

should be the same the only thing we're

0:00:22.240,0:00:25.840

changing in the journal entries are

0:00:24.240,0:00:27.599

the cogs in the inventory, that's the

0:00:25.840,0:00:28.640

whole purpose of this is is to figure

0:00:27.599,0:00:30.000

out what it cost us

0:00:28.640,0:00:32.079

in terms of inventory and what are we

0:00:30.000,0:00:32.960

expensing, so this one should probably go

0:00:32.079,0:00:35.520

pretty quickly

0:00:32.960,0:00:37.280

assuming that you watch the FIFO video

0:00:35.520,0:00:39.600

right previous to this one,

0:00:37.280,0:00:40.640

so let's go through it. First one we

0:00:39.600,0:00:42.640

don't do anything with the beginning

0:00:40.640,0:00:44.559

inventory once again,

0:00:42.640,0:00:46.399

then we have the january 15 purchase of

0:00:44.559,0:00:47.840

150 at 12

0:00:46.399,0:00:51.120

each that journal entry is going to be

0:00:47.840,0:00:53.280

the same still inventory cash at 1800,

0:00:51.120,0:00:54.480

uh then we have the first sale which is

0:00:53.280,0:00:57.520

the april 1st

0:00:54.480,0:00:58.000

sale of 175 at 25, so again I'm just

0:00:57.520,0:01:00.559

going to go ahead

0:00:58.000,0:01:03.039

and put down my journal entry accounts,

0:01:00.559,0:01:05.040

so cash, sales revenue, cogs, and inventory.

0:01:03.039,0:01:06.799

Now let's get into the calculations so

0:01:05.040,0:01:08.000

again like I just said that this is

0:01:06.799,0:01:09.439

going to be the same because we're not

0:01:08.000,0:01:11.200

changing anything other than the expense

0:01:09.439,0:01:13.680

but just for formality reasons

0:01:11.200,0:01:15.520

let's go through it. Sales revenue is

0:01:13.680,0:01:18.720

going to give me whatever is going to be

0:01:15.520,0:01:20.640

what I sold so the 175 times the 25

0:01:18.720,0:01:23.040

dollars I sold them for each and that's

0:01:20.640,0:01:26.159

going to give me 4 375,

0:01:23.040,0:01:28.640

so again that is going to be my

0:01:26.159,0:01:32.159

cogs excuse me that's going to be my

0:01:28.640,0:01:32.159

cash and my sales revenue.

0:01:32.799,0:01:35.040

All right. That takes care of that one

0:01:34.159,0:01:36.079

other thing I'm going to do is I'm going

0:01:35.040,0:01:38.880

to put that little slash

0:01:36.079,0:01:41.040

across the 175 because again we're done

0:01:38.880,0:01:43.119

with it for the purpose of sales.

0:01:41.040,0:01:44.960

Now let's get into the cog side so let's

0:01:43.119,0:01:45.439

talk about what we need to expense well

0:01:44.960,0:01:49.200

we need to

0:01:45.439,0:01:51.200

expense 75 or excuse me 175,

0:01:49.200,0:01:52.640

so that's the number that we need to hit

0:01:51.200,0:01:54.560

we're using LIFO

0:01:52.640,0:01:56.079

remember it means last in first out or

0:01:54.560,0:01:58.560

more specifically it means the most

0:01:56.079,0:02:00.880

recent from that sale is the first ones

0:01:58.560,0:02:02.719

that we expense, so it's a top excuse me

0:02:00.880,0:02:04.079

it's a bottom-up approach

0:02:02.719,0:02:06.240

but we're only going to start with what

0:02:04.079,0:02:07.840

we know and as of

0:02:06.240,0:02:09.679

april 1st we don't know anything below

0:02:07.840,0:02:12.560

it so we have to go above it to the

0:02:09.679,0:02:15.040

january 15th purchase. So of those 150

0:02:12.560,0:02:16.720

150 that we purchased in january 15th

0:02:15.040,0:02:19.920

we're going to take all of them,

0:02:16.720,0:02:21.280

so 150 at 12 a piece that's going to

0:02:19.920,0:02:23.440

give me a total of

0:02:21.280,0:02:24.560

one thousand uh excuse me eighteen

0:02:23.440,0:02:26.080

hundred.

0:02:24.560,0:02:28.160

All right. We I'm gonna put a little

0:02:26.080,0:02:29.280

slash mark through the 150 in a

0:02:28.160,0:02:31.040

different direction let me know I don't

0:02:29.280,0:02:33.280

have any more of those left,

0:02:31.040,0:02:34.640

I still haven't hit 175 so I need to

0:02:33.280,0:02:36.080

pull out 25

0:02:34.640,0:02:38.080

more and I'm going to pull those from

0:02:36.080,0:02:39.040

the beginning inventory. So I'm going to

0:02:38.080,0:02:43.760

say 25

0:02:39.040,0:02:44.959

at 10 a piece that's going to be 250,

0:02:43.760,0:02:46.480

again I'm going to put a little slash

0:02:44.959,0:02:48.560

mark through the 50 because I don't have

0:02:46.480,0:02:50.160

those anymore but I do have 25 still so

0:02:48.560,0:02:52.080

I'm going to put myself a note that says

0:02:50.160,0:02:53.599

hey don't forget you still have 25 from

0:02:52.080,0:02:57.159

the beginning inventory.

0:02:53.599,0:03:00.080

Now I'm going to add up the 1800 and the

0:02:57.159,0:03:02.080

250 dollars that's going to give me a

0:03:00.080,0:03:04.480

total of 2050

0:03:02.080,0:03:05.440

and again that's going to be my cogs, so

0:03:04.480,0:03:06.879

I'm going to put that in my journal

0:03:05.440,0:03:08.319

entry.

0:03:06.879,0:03:10.239

All right. That takes care of the first

0:03:08.319,0:03:13.519

sale, now let's go to

0:03:10.239,0:03:15.840

the may purchase of 200. that's going to

0:03:13.519,0:03:18.319

be the same as it was before

0:03:15.840,0:03:19.360

as a matter of fact so is the june 2nd

0:03:18.319,0:03:21.680

purchase. So I'm just going to go ahead

0:03:19.360,0:03:23.760

and put those down as inventory and cash

0:03:21.680,0:03:25.760

the may 1 is going to be 3 000 on each

0:03:23.760,0:03:28.000

and then the june 1 is going to be 3 600

0:03:25.760,0:03:32.080

and I just multiplied 2 000

0:03:28.000,0:03:36.080

times 15 and 2 25 times 16.

0:03:32.080,0:03:37.680

All right. Now we get to the 7 11 sale,

0:03:36.080,0:03:39.840

again I'm going to go ahead and put my

0:03:37.680,0:03:42.640

accounts down cash, sales revenue, cost

0:03:39.840,0:03:44.400

or cogs, and inventory, let's go ahead and

0:03:42.640,0:03:45.440

calculate the sales revenue,

0:03:44.400,0:03:47.920

it's going to be the same as it was

0:03:45.440,0:03:49.280

before but just for again

0:03:47.920,0:03:51.519

formality reason I want to show you how

0:03:49.280,0:03:53.200

we do it. It's going to be the 430

0:03:51.519,0:03:55.200

times the 25 dollars a piece that we

0:03:53.200,0:03:56.879

sold them for and that will give me a

0:03:55.200,0:03:58.640

total of 10 thousand

0:03:56.879,0:04:00.080

750, I'll go ahead and put that in my

0:03:58.640,0:04:03.599

journal entry

0:04:00.080,0:04:04.959

10750 for both cash and sales revenue.

0:04:03.599,0:04:06.560

Now I'm going to put a little slash

0:04:04.959,0:04:07.760

through the 430 because we are finished

0:04:06.560,0:04:10.879

with that

0:04:07.760,0:04:13.360

I don't want to mistakenly use that.

0:04:10.879,0:04:15.120

Now we have to expense those 430, so 4

0:04:13.360,0:04:16.799

30 is the number that we have to hit

0:04:15.120,0:04:18.479

again we're going to start with the most

0:04:16.799,0:04:20.239

recent of that sale

0:04:18.479,0:04:21.840

so the most recent purchase from that

0:04:20.239,0:04:24.960

sale is the 6-2 purchase

0:04:21.840,0:04:25.759

of the 225 at 16, so I'm going to start

0:04:24.960,0:04:29.600

there I'm going to pull

0:04:25.759,0:04:33.040

all 2 25 out of there so 225

0:04:29.600,0:04:34.240

at 16 that's going to give me 3600.

0:04:33.040,0:04:35.840

I'm going to put a little slash to the

0:04:34.240,0:04:37.040

225 because we don't have any more of

0:04:35.840,0:04:40.160

those

0:04:37.040,0:04:41.199

I haven't hit 430 yet so I need to pull

0:04:40.160,0:04:42.800

some more where am I going to pull that

0:04:41.199,0:04:44.560

from what's the next one going up which

0:04:42.800,0:04:46.720

is the 5-1 purchase

0:04:44.560,0:04:48.880

and of those 200 I'm going to put alt or

0:04:46.720,0:04:51.120

pull all 200 of those out,

0:04:48.880,0:04:52.400

so 200 at 15 a piece that's going to be

0:04:51.120,0:04:54.080

3 000,

0:04:52.400,0:04:55.680

put a little slash mark through the 200

0:04:54.080,0:04:58.080

because we don't have any more of those.

0:04:55.680,0:05:00.320

Now currently we're sitting at 425 we

0:04:58.080,0:05:01.039

have not hit 430 yet so we still need to

0:05:00.320,0:05:03.280

pull five

0:05:01.039,0:05:04.720

more and the only place we can pull five

0:05:03.280,0:05:05.600

more is all the way from the beginning

0:05:04.720,0:05:08.479

inventory,

0:05:05.600,0:05:09.199

so I'm gonna pull five of those so five

0:05:08.479,0:05:11.039

at

0:05:09.199,0:05:12.400

ten dollars a piece that's going to give

0:05:11.039,0:05:14.160

me fifty dollars,

0:05:12.400,0:05:15.680

put a little slash mark through that 25

0:05:14.160,0:05:17.919

that we have at the top because we don't

0:05:15.680,0:05:19.600

have 25 anymore we have 20 now so again

0:05:17.919,0:05:20.080

I left myself that little note that says

0:05:19.600,0:05:21.680

hey

0:05:20.080,0:05:23.120

don't forget we still have 20 of the

0:05:21.680,0:05:26.320

beginning inventory

0:05:23.120,0:05:28.160

add up those amounts that 3 600 the 3000

0:05:26.320,0:05:31.039

and the 50 that's going to give me

0:05:28.160,0:05:32.000

a total of 650 and that's going to be my

0:05:31.039,0:05:34.639

cogs for this

0:05:32.000,0:05:36.880

sale, so put that in my journal entry

0:05:34.639,0:05:38.800

6650 66.50.

0:05:36.880,0:05:40.320

All right. So now we're done with all of

0:05:38.800,0:05:41.840

the journal entries now let's get into

0:05:40.320,0:05:43.440

those things that we were finding before

0:05:41.840,0:05:44.560

the cost of goods sold the gross profit

0:05:43.440,0:05:45.680

the ending inventory

0:05:44.560,0:05:48.000

and I'm going to go ahead and start with

0:05:45.680,0:05:49.600

again the total revenue. So total revenue

0:05:48.000,0:05:51.919

again is just looking at the

0:05:49.600,0:05:53.280

two sales revenue line items on our

0:05:51.919,0:05:56.479

journal entry adding them up

0:05:53.280,0:05:58.240

so sales revenue equals the 43.75 plus

0:05:56.479,0:06:00.000

the 10750

0:05:58.240,0:06:02.160

that's going to give me a total revenue

0:06:00.000,0:06:04.080

of 15 125,

0:06:02.160,0:06:06.479

that hasn't changed since when we did it

0:06:04.080,0:06:07.600

in the FIFO it's the same as FIFO

0:06:06.479,0:06:08.960

and that's pretty much how it's going to

0:06:07.600,0:06:10.160

be when we do weighted average too

0:06:08.960,0:06:10.880

because we're the only thing we're

0:06:10.160,0:06:14.319

changing is

0:06:10.880,0:06:14.880

cogs. All right. Let's look at total

0:06:14.319,0:06:15.840

cogd

0:06:14.880,0:06:17.199

again we're just going to look at the

0:06:15.840,0:06:20.479

two line items that says cost of goods

0:06:17.199,0:06:22.800

sold add them up so 2050 plus 66.50

0:06:20.479,0:06:23.600

that's going to give me a total cogs of

0:06:22.800,0:06:26.560

8700.

0:06:23.600,0:06:27.680

All right. So now we're going to the

0:06:26.560,0:06:29.199

gross profit

0:06:27.680,0:06:30.800

gross profit is just simply the

0:06:29.199,0:06:33.360

difference between those two numbers

0:06:30.800,0:06:36.160

sales revenues minus cogs so sales

0:06:33.360,0:06:39.520

revenue again is 15 125

0:06:36.160,0:06:42.039

cogs is 8 700 and if I subtract the 2

0:06:39.520,0:06:43.600

that's going to give me a difference of

0:06:42.039,0:06:45.600

6425,

0:06:43.600,0:06:48.560

that is my gross profit that is what I

0:06:45.600,0:06:50.319

made on the sale alone.

0:06:48.560,0:06:52.560

And then finally the last thing is the

0:06:50.319,0:06:54.240

ending inventory, now we know

0:06:52.560,0:06:56.560

we just said this in the last video that

0:06:54.240,0:06:58.560

FIFO it was 20 units

0:06:56.560,0:06:59.759

and LIFO is going to be 20 units as well

0:06:58.560,0:07:01.120

and when we do weighted average it's

0:06:59.759,0:07:02.720

going to be 20 units as well but the

0:07:01.120,0:07:04.000

important part is how much those 20

0:07:02.720,0:07:05.680

units cost.

0:07:04.000,0:07:06.720

So that's 20 units if we go all the way

0:07:05.680,0:07:08.000

back up to the beginning inventory

0:07:06.720,0:07:10.400

that's ten dollars a piece

0:07:08.000,0:07:11.919

so at ten dollars that will give us an

0:07:10.400,0:07:14.960

ending inventory of

0:07:11.919,0:07:15.440

two hundred dollars, and that is how you

0:07:14.960,0:07:17.199

do

0:07:15.440,0:07:18.479

a an intermittent purchase and sale

0:07:17.199,0:07:20.560

example using

0:07:18.479,0:07:21.919

LIFO. Hopefully that made sense hopefully

0:07:20.560,0:07:23.199

it wasn't too brutal,

0:07:21.919,0:07:25.360

in the next video we're going to be

0:07:23.199,0:07:26.800

doing the weighted average, so

0:07:25.360,0:07:31.840

hopefully this is this is good enough

0:07:26.800,0:07:31.840

for this one. So y'all have a good.

Intermittent Weighted Average Example

0:00:01.160,0:00:05.669

All right. Here we are with the final video

of the LIFO FIFO weighted average examples

0:00:05.669,0:00:09.990

doing intermittent purchases and sales. So

in this one is same problem. Everything's

0:00:09.990,0:00:13.480

the same, except we are going to be using

the weighted average method this time. Like

0:00:13.480,0:00:17.640

I said, weighted average can be a little bit

trickier. So I want to try to show you some

0:00:17.640,0:00:24.349

kind of helpful hints and tips on how to get

past that. The first thing is hopefully if

0:00:24.349,0:00:29.250

you remember doing it for the purchase purchase

purchase, an example that we did, a purchase

0:00:29.250,0:00:33.879

sale example that we did earlier using the

weighted average method. Hopefully you look

0:00:33.879,0:00:38.240

at that going, you know what? That's not too

bad. And if you did say that, then this one

0:00:38.240,0:00:42.710

is not going to be too bad either, although

it has multiple sales and multiple purchases,

0:00:42.710,0:00:47.790

because what I'm going to do is I'm going

to hide everything up to the first behind

0:00:47.790,0:00:53.079

the first sale. So I'm just going to put,

you know, I'm going to hide it now. It looks

0:00:53.079,0:00:57.930

pretty much like what it was before an intermittent

purchase and sell is just a single purchase

0:00:57.930,0:01:02.170

purchase sale done multiple times. So I'm

just going to make it look as close as I can

0:01:02.170,0:01:07.730

to the other ones that we did. So going back

to the way we the Journal issues we were doing,

0:01:07.730,0:01:14.580

the first one doesn't change the 1 15 entry

for inventory and cash for 1,800 not any different.

0:01:14.580,0:01:19.050

Then we get to the April first sale where

we sell 175. So I'm going to go ahead and

0:01:19.050,0:01:23.870

put my account down. So cash, sales revenue

box inventory, and then we'll start doing

0:01:23.870,0:01:28.030

the calculations for them. As you can imagine.

Hopefully you have paid attention up to this

0:01:28.030,0:01:32.490

point. The cash and the sales revenue isn't

going to change because nothing has changed

0:01:32.490,0:01:36.420

between the three methods when it terms in

terms of what we sold and how much we sold

0:01:36.420,0:01:41.150

it for. The only thing is different is the

method that we use, but that's for cogs and

0:01:41.150,0:01:45.930

inventory. But again, just to go through it

and calculations wise, keep up, make sure

0:01:45.930,0:01:50.970

we're there. Sales revenue is 175. How many

we sold times, the 25 that we sold it for

0:01:50.970,0:01:55.610

each. That's going to give us 4,375. So I'm

going to go ahead and put that in my Journal

0:01:55.610,0:02:00.050

entry. Again. I'm also going to put a little

slash Mark through the 1 75 because again,

0:02:00.050,0:02:06.580

we're done with that. Now I need to from the

sales purchase from the sales perspective.

0:02:06.580,0:02:11.090

But now I need to expense those 1 75, so that's

the number I need to hit. But remember, we're

0:02:11.090,0:02:15.690

using weighted averages time. So we got to

look for that magic number and remember, it's

0:02:15.690,0:02:20.280

a three step process. So the first step is

to multiply everything out. So I'm going to

0:02:20.280,0:02:24.941

multiply the 50 times 10. That's going to

give me 500 and the 1 50 times 12, that's

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going to give me 800. Step one, step 2 is

to add those two together. So if I add that

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up, that's going to give me 2 300. And then

step three is to divide that number that's

0:02:37.190,0:02:42.920

2 300 by the total quantity we have available

to sell. Well, to divide that by the total

0:02:42.920,0:02:46.380

quantity, we need to add up everything that

we have available to sell. So we have the

0:02:46.380,0:02:51.510

50 and the 150, we add that up. We don't have

individual 5,150 more. We just have a total

0:02:51.510,0:02:58.440

of 200 now. So if we divide the 2 300 by the

200 units we have available to sell, that's

0:02:58.440,0:03:05.319

going to give us a weighted average amount

of 11 dollars and 50 cents per unit. So now

0:03:05.319,0:03:10.340

we don't have 50 dollars or 50 units at 10

dollars and 150 units at 12 dollars. What

0:03:10.340,0:03:15.650

we really have in inventory is we have 200

units at 11 dollars and 50 cents a piece.

0:03:15.650,0:03:20.000

Makes things a whole lot easier because now

we know that we have to expense 1 75. So I'm

0:03:20.000,0:03:28.680

going to take 1 75 out of that 200. And so

1 75 at 11 50, that's going to give me 2,012

0:03:28.680,0:03:32.450

dollars and 50 cents. That's my cogs now.

So I don't have to break it down into its

0:03:32.450,0:03:39.430

pieces. It's just they're all the same cost

11 50. So I'm going to put that 2,012 50 into

0:03:39.430,0:03:45.500

my Journal entries 2,012.50, 2,012.50. And

I'm also going to like we've been doing put

0:03:45.500,0:03:50.270

a little slash that 200 at the top because

we don't have 200 anymore. We took 175 of

0:03:50.270,0:03:55.610

those out. So I put a little slash Mark, put

25. Let myself know. Hey, don't forget that

0:03:55.610,0:04:01.790

we have 25 at 11 50 still. Alright. So we're

done with the first sale. So now we're going

0:04:01.790,0:04:09.170

to move the box up and get ready for the next

one. Now, before we can do that, we need to

0:04:09.170,0:04:18.090

fix something because remember, we still had

25 at 11 50 as the ending inventory of the

0:04:18.090,0:04:22.280

last sale. And we know with ending inventories,

they become beginning inventories for the

0:04:22.280,0:04:26.230

next one. So I'm just going to put myself

a little note that says, as of 4-1-I have

0:04:26.230,0:04:31.740

a beginning inventory or ending inventory

for the last sale of 25 units at 11 dollars

0:04:31.740,0:04:36.000

and 50 cents a piece. You know what you call

it doesn't matter. But I call it beginning

0:04:36.000,0:04:39.810

inventory for the next sale because I also

know that with beginning inventories, I don't

0:04:39.810,0:04:43.780

have to do a Journal entry because I've already

done the Journal entry form. So now I move

0:04:43.780,0:04:48.590

to the next entries, which are the 51 and

the 6 2 purchases. Again, those are going

0:04:48.590,0:04:56.600

to look identical. Inventory, cash 3,006 3

600, respectively. And then we have the 7

0:04:56.600,0:05:01.440

11 sales. So I go ahead and put my Journal

the countdown, cash, sales, revenue, cogs

0:05:01.440,0:05:05.460

and inventory. I'm going to go ahead and calculate

my sales revenue. So it's going to be the

0:05:05.460,0:05:12.120

same for 30 times the 25. It's going to give

me 10,007 50, put that in my Journal and 3

0:05:12.120,0:05:16.360

10,000 and 52,050 put my little slash Mark

through the 4 30 because we're done with the

0:05:16.360,0:05:24.680

4 30 in terms of sales. Now we have to expense

430 units. We have to get rid of them. And

0:05:24.680,0:05:28.720

with a new sale comes a new magic number.

We have to do the same process again to find

0:05:28.720,0:05:34.560

the new weighted average amount. So step one

is to multiply everything out. So 25 times

0:05:34.560,0:05:43.810

11 50, that's going to give me 287 5,200 at

15. That's going to give me 3,002 25 at 16.

0:05:43.810,0:05:50.120

That's going to give me the 600. Step one,

step 2 is to add all that up. So that's going

0:05:50.120,0:05:58.220

to give me a total of 6,008 87 50. And then

step three is to divide that number by the

0:05:58.220,0:06:04.870

total number we have available to sell, which

is the 25 th 202 25. We don't have those individual

0:06:04.870,0:06:14.810

anymore because we have now a total of 4 50.

So 4 50 units divided into 6 8 68 87 50. And

0:06:14.810,0:06:21.020

that's going to give me a weighted average

cost of 15 dollars and 31 cents per unit.

0:06:21.020,0:06:27.729

So now again, we don't have 25 at 11 50, we

don't have 215 and 2 25 at 16. We have just

0:06:27.729,0:06:34.770

a total of 4 50 at 15 dollars and 31 cents.

Now that we know that then we can expense

0:06:34.770,0:06:41.870

those 4 30 out of that for 50. So we'll take

4 30 out. So it'll be 4 30 at 15 dollars and

0:06:41.870,0:06:45.880

31 cents per unit. Multiply that out. That's

going to give me a total of 6,583 dollars

0:06:45.880,0:06:52.740

and 30 cents. That is my cogs. And that is

what I'm going to put in my Journal interest.

0:06:52.740,0:06:59.479

There you go. And then one last thing, I'm

going to put that little slash Mark through

0:06:59.479,0:07:03.270

the 4 50 at the top because we don't have

for 50 anymore. We have the 20 that we've

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had on every one of them so far. 20 still

is the ending units that we have. Alright.

0:07:09.490,0:07:14.970

So now I'm ready to get into the figuring

out those things that we asked us to do, cogs,

0:07:14.970,0:07:17.971

gross profit and inning inventory. And again,

I'm going to start with the total revenue.

0:07:17.971,0:07:24.520

Total revenue doesn't change. It's still going

to be 15,000 or 25 for the same reason. It's

0:07:24.520,0:07:30.330

the 4,003 75 plus the 10,007 50. The two line

items in our Journal trees that says sales

0:07:30.330,0:07:35.160

revenue, total cost is going to be the same

thing. Same way we figured out not the same

0:07:35.160,0:07:44.100

answer, because total 6,005 83 30. The two

line items that says cogs and our Journal

0:07:44.100,0:07:50.680

injuries. Add that together. That's going

to be 8,005 95 and 80 cent. Now we get to

0:07:50.680,0:07:55.139

the gross profit. We know gross profit. Or

at least we should. No gross profit is sales

0:07:55.139,0:08:04.259

revenue minus cogs. So the 15,001 25 minus

8,005 8 5 95 80 that will give us a difference

0:08:04.259,0:08:12.341

of 6,529 dollars and 20 cents. And finally,

the last thing is the ending inventory. We

0:08:12.341,0:08:17.860

know it's 20 because it's been 20 units every

time for the Indie inventory. But this time

0:08:17.860,0:08:24.699

it is in the inventory of 20 at the 15 dollars

and 31 cents we found. And that's going to

0:08:24.699,0:08:34.179

give us an ending ending value of 306 dollars

and 20 cents. And that is how you do the weighted

0:08:34.179,0:08:41.060

average method using an example that has intermittent

purchases and sales. So we've done a lot with

0:08:41.060,0:08:45.140

the five Folio weighted average. We've done

it with just purchase purchase sales. And

0:08:45.140,0:08:49.329

then we did intermittent. Hopefully, this

made sense. If you have any questions, please

0:08:49.329,0:08:54.490

feel free to comment them. I'm happy to help.

This is one of those things. Like I said,

0:08:54.490,0:08:59.019

this is typically the more challenging one.

And so if you can figure out a structure or

0:08:59.019,0:09:04.009

a system to put in place that's going to help

you through it, it'll make it a little bit

0:09:04.009,0:09:08.050

better. And this is the system that put in

place. So hopefully it helps you. So you'll

0:09:08.050,0:09:08.600

have it good one.