FIFO, LIFO, and average cost ESTIMATE
Ending inventory and cost of goods sold from the same purchase layers, under three costing flows.
General information, not tax or legal advice. Adopting LIFO for a tax return has its own IRS rules, including Form 970. This page only costs the layers you type. It does not decide which method you may use.
Result ESTIMATE
Same goods, three stories
FIFO treats the oldest units as the ones sold. LIFO treats the newest units as the ones sold. Weighted average uses one unit cost: total cost of the layers ÷ total units. On 10 units at $5 and 10 units at $8, with 12 sold, FIFO cost of goods sold is $66 (10 × $5 + 2 × $8) and ending inventory is $64. LIFO cost of goods sold is $90 (10 × $8 + 2 × $5) and ending inventory is $40. The average unit cost is $6.50, so 12 units cost $78 and 8 remain at $52. The three ending balances plus the three costs of goods sold each add back to the $130 you paid. If they do not, the arithmetic is wrong.
The cost of goods sold calculator uses beginning inventory, additions, and ending inventory. It does not care how you picked the ending number. This page is how you pick it from layers. A physical count still has to agree with the units. The year-end checklist is where that count belongs.
Books and the tax return can differ
Many small firms keep one method in the general ledger. Changing the tax method is a filing decision, and LIFO in particular is not a switch you make by renaming a spreadsheet column. IRS Publication 538 discusses inventory methods, and Form 970 is the LIFO adoption form. This tool stops at the arithmetic.