Accounting for Beginners #46 / FIFO / First in First Out Journal Entries / Inventory Perpetual

Accounting for Beginners #46 / FIFO / First in First Out Journal Entries / Inventory Perpetual

yo yo yo hey what is up hope everyone is
having a wonderful time right now why who do you ask who are you man I am CPA
strength I am the strongest licensed CPA in the state of Florida what are you
doing here in April what are you doing I’m teaching
accounting to the world here building block by building block basics by basics
we got a big one today we’ve got a lot to do so I’m just going to hop right
into this one in a second but first here’s the playlist to the here’s a card
to the best playlist in the world right here best place in the world accounting
playlist you can be a CPA whatever you want just watch this playlist let’s go
what’s in this video this video is accounting for beginners number 46 4 and
then a big 6 you’re going to love this one you’re probably going to come back
to this one because there’s a lot of action this might be intermediate you
might not be to this level yet this is your first one start a 1 come on back
and by time you get to this one you should be able to crush it there are
some new concepts in this one some new concepts some old concepts a lot of
things together let’s just go this is inventory perpetual number 46
from the 40s I think we’ve done a lot of inventory flow skill inventory pets will
read we’re going to take care of it as we go take care everything as we go and
this one we’re going to first-in first-out journal entries we’re gonna do
some journal entries here fight foe journal entries we’re going to do
journal entries we’re going to buy and sell widgets by it’s all legit certain
widgets per cost and then we’re going to be we’re going to make some journal
entries we’re going to journal train February March April May and June let’s just look over let’s just look
over this for a second right now we have two two journal entries in February two
journal entries in April two journal entries in May what’s happening in
February February April and February we’re selling we’re selling widgets
April we’re selling widgets May we’re selling widgets so whatever we’re
selling we’re just in a perpetual system in potential inventory we’re going to
have to two journal entries per would have two journal entries per transaction
per one transaction so let’s get started January you have in your inventory you
have a thousand you know a thousand widgets like tops-20 hold on hold on
hold on I gotta get my catherine’s is my calculator I got this sense I was
studying for the CPA exam before was acting in college I had it Oh anyways
it’s big bit right up here I used to buy on an old co-worker when I actually
worked in latest in corporate world co-workers saw this corner ovens I had
at work and he was like it was like he was a CPA a great guy he’s like probably
my mentor taught me the most stuff was I have a dog at home or something I was
like I was like yeah he’s like this morning laughs his wine so let’s get the
calculator alright so in our inventory we have a thousand units a twenty one
thousand times twenty without $20,000 worth of worth of
widgets our inventory good around 20k 2010 which weren’t us rock dish those
maracas let’s do this when we pump it some widgets let’s go let’s go I got a
sound like a $20,000 a we just have ourselves some okay February 7 700 which
it’s seven hundred units of widgets like $30
a pop all right let’s go let’s sell let’s sell it so if I’m selling it I’m
getting money all right how much am I getting I’m getting thirty times seven
hundred thirty times seven hundred twenty one thousand I’m getting twenty
one thousand catch let’s pay our debit because I’ll see cash is an asset and
it’s going up because we’re getting it so that’s our drive it what’s our what’s
our credit going to be well it’s going to be twenty one thousand and we sold
which I’m going to do for for our money for our business so team via sales of
revenue that’s going to be recurrent twenty one thousand I’m going fast in
these journal entries especially I’m going to go fast in journal entries
until we get down to April because that’s where the crux of the problem is
but anyways let’s go now this one is new for everybody
okay we’re perpetual I just wanted to make notice note this before we were
selling something how there’s two journal entries for every transaction
because we’re keeping up with this and we don’t have when we first bought the
inventory we definitely we we definitely inventory credited cash so we just
create an asset for assets there’s no expense on the books for this perpetual
system so we’ve got to take the inventory off right we’re going to
credit the inventories we’re taking it off and in in Torun asset so negative
assets of credit we’re taking it off and have to put our expense on here the cost
of goods sold or expense so that’s consequence olds of inexpensive debit
right here so that’s going to be so it’s going to be for the costs right cost of
you taking the inventory off for how much it costs cost of goods sold well
how much did it how much did the inventory cost well this was what was in
our inventory our $20,000 for our 20th pot alright so we just sold 700 and how
much did these 700 cost us we sold it for the house it cost us $20 so
seven hundred times twenty dollars fourteen thousand fourteen thousand
dollars our debit in our credit debit Costigan solar fourteen thousand credit
inventory fourteen thousand can y’all going fast but we got to go we got to go
a lot of information in this video we’re going to march now we’re in March what
happened in March we purchased five hundred at 22:40 okay we purchased five
hundred times twenty two point four 11200 we purchased here here’s what we
did here is what we did now we’re getting more in the books
seeing the purchase so we have cash leaking 11200 that’s our credit what are
we getting we’re getting wigs rehan rhetoric that SAR debit 11,200 okay not
only fast but hey we gotta go we’re going to go we’re going to go we’re
going to go we’re going to make money even going to need let’s go April April
so anyway yes we purchased we purchased these in March so we purchased five
hundred so what at 22:40 what’s in our inventory right now our inventory in
April we’re going into April this is our inventory okay now now where’s the
problem that’s what I’ve been trying to go fast so this is this is the main part
of the problem right now I really need you for the next five minutes now this
is the crux of the problem this is what we’re doing the problem everything else
is pretty much just leading let’s go you know this is the first in first out
what’s in our inventory we have three hundred codes we had a thousand we sold
700 we have 300 inventory at $20 cost now we just purchased 500 more in March
at 22:40 so we have a total of eight hundred three hundred and twenty dollars
five hundred and twenty two forty that’s what sort of inventory April we sell
three hundred and sixty widgets at $30 piece so let’s take care of let’s take
care of the easy stuff sell sell I’m selling stuff so
getting shivers so give me a debit cash right let’s see where are we where in
April April debit cash yeah how much 30 times 360 let’s go 30 times 360 equals
10,000 800 yet debit cash ten thousand eight hundred and that’s for selling
widgets oh I know that’s the Christ can be sales
10800 boom that’s our first one so now that’s our silver shell in something we
need we need to have an expense and get that inventory off the books because
we’re doing a perpetual system so there’s April our second journal entry
and this is like a heart this is the hard one because well not the hard one
with the fun one but the interesting one the interesting one now because we’re in
April now we’re in April and we sold 360 units okay but in our inventory we have
some units some units that we got for twenty and then some units that we got
for twenty to forty so which out of these and are all just in a big bin
they’re just widgets you can’t really differentiate that they all look the
same so this is how we you know they all look the same to know which ones you’re
pulling out actually we’re going to fill the lists are going to gold so we’re
selling 360 so which which ones are we doing which you know which which 360 are
we selling out of these or how do we know to value how do we know how to
value this the 360 widgets what do they cost for this because we have to do a
journal entry and get up the books and get our cost we’re trying to get our
cost of goods sold so how do we know how to value that you would say how well how
are we value with how are we valuing the inventory C is going to slow down how
are we value in the inventory first-in first-out what was the first what was
the first in our inventory hold on one second I noticed my lips getting stuck in my
teeth way how many ways go or whether I were having too much fun here I’m loving
this go burn I know I was on something good right tell me something good brain fart or I know as I was explaining
this and which ones are we selling we have 360 which 1000 how do we value in
the inventory we figure out how we’re doing first-in first-out that’s how
we’re figuring this out so what was the first what was the first items in our
inventory these 300 so those are the first outsourced own 360 well we’re
still on all of these so 300 times 20 and 6000 that’s how I get these this
6000 this is the this is 300 that we had at first then we’re selling that we need
as we’re selling 360 so we have to sell 60 of these at 22:40 so 60 times 22.4
equals 13 44 and that’s how I get this this is 300 and this is 60 360 so anyway
that’s how I get the 7044 that’s how I value that’s how this is valued right
here seven thousand three hundred and forty four word I’m definitely um I was
going to I had plans to do these left to do main June but I’m going to do these
in another video because the crux this problem let’s get let’s get so I just
want you to seal tab we have a couple of minutes I want to spend how how this
can’t help 73 373 44 came about how did we get that
now you know it’s a significant cost will well like debit and credit I hope
we know that but why why did I pick 300 why did I pick 300 of these all of these
why did I pick all of these and then 60 of the ones at 22:40 because we’re doing
first-in first-out so the first one that we had in was 300
of these so we’re going to sell we need to sell 360 so definitely all of these
and then 60 because these were the first in and this was the first out so that’s
why all of these first so that’s six thousand so six thousand plus plus 60 of
these five hundred so we have four hundred and forty left in our inventory
all right but that’s that’s how we get so 60 at twenty to forty because we
don’t we’ve already sold this is all we have in our inventory analysis we’ve
sold 300 of the ones at $20 so they’re all gone then if you’re okay look if
you’re really dying to get ahead and going in demand leave we have we have
440 in our inventory and then we sell 240 more so we have 200 of our inventory
I believe then we’re going into June and we buy 600 more inventory so 200 foot
600 equals 800 in the inventory cuz I’m going to check my math and save the you
hundred is what you get your inventory I don’t know
but anyways I’ll be back with more videos love doing this so then if you’re
going through a rough patch just keep on going because things are a temper in
this life I’m telling you things are temporary you get real happy to get real
high you’re going to come down you get real low and things seem like they’re
never going to get better and just keep on keep on something
something will happen it has to get better it’s always darkest right before
the Sun starts shining remember that deuces

20 thoughts on “Accounting for Beginners #46 / FIFO / First in First Out Journal Entries / Inventory Perpetual

  1. The STRONGEST CPA.. You are incredible my Final today was a straight ( A ) easy , thanks to you , you are awesome man , keep doing what you are doing . You are the best and thank you so much m/^_^m/ . I DC.ADE.LER'ed my way out of the exam. 🙂

  2. Yes…we love all his videos. His method of teaching really works to understand the Accounting basics in a simple way…I support & follow him. Yo Yo Yo…💪👍✌We are now called as

  3. I have the worst accounting teacher! He is a lawyer and CPA, but he can't teach! I wish you were my teacher! Love!

  4. I had a question about weighted average costing. It makes sense that you calculate the weighted average of all of the widgets to get the cost, but what about after you sell some of your inventory? How often do you calculate that, and is that what is known as a "Cost Roll-Up"?

  5. I was following but i am missing something. You said you sold 700 at 30, so the cash and sales figure says 21k. But later you said you sold 300. I probably am off. Please let me know.

  6. God bless you CPA. Wherever you are, I hope you're rolling around naked, oiled up, in a large pile of money and senoritas licking your toes

  7. I keep your playlist going in the bg while I do banking rec's. Love your words of wisdom about life mixed in with the numbers.

  8. What if sometimes the price of our inventory goes up and then later goes back down, but we want to sell the lowest cost first? Can we do Lowest Cost First Out (LCFO) or Highest Cost First Out (HCFO)?

Leave a Reply

Your email address will not be published. Required fields are marked *