Solved Kardex Problems
Solved Kardex Problems
Solving an inventory card (kardex) problem feels hard until you solve the first one, step by step. In accounting courses the classic exercise always asks the same thing: with a list of purchases and sales for the month, build the kardex card and find out what each sale costs, what the ending inventory is worth and what the cost of goods sold was. Here we solve two complete problems with their tables and every calculation explained: one using the weighted average method, the most common one in small businesses, and a short one using the FIFO method.
The key is understanding each column of the card: inflows are the purchases that increase inventory, outflows are the sales or uses that reduce it, and balance is what remains after each movement. With that balance kept correctly, you get the two figures accounting needs at month-end: the cost of goods sold and the value of the ending inventory.
The method in five steps
Before touching the numbers, always follow the same sequence; it prevents more than half of the mistakes:
- Sort the movements by date. A kardex only makes sense in chronological order, from the opening balance to the last operation of the month.
- Identify the valuation method. The problem must state whether it uses weighted average, FIFO or LIFO. Each method gives a different result, and mixing them is the most common mistake.
- Process one row at a time. Each movement changes the balance: a purchase increases it and may change the unit cost; a sale reduces it and takes the goods out at their cost.
- Record quantity and value. Never write only the units: every row needs units, unit cost and total value, because the value is what feeds the accounting records.
- Check at the end. The ending inventory, in units and in pesos, must match the last row of the card and the checks in the final section.
Exercise 1: weighted average kardex, step by step
A small grocery store keeps the kardex of its fastest-moving product, 500 g bags of ground coffee, valued with the weighted average method. In January it recorded these movements: on the 1st it had an opening balance of 80 bags at $10,000; on the 5th it bought 120 bags at $12,000; on the 8th it sold 90; on the 12th it bought 150 bags at $12,500; on the 18th it sold 100; on the 22nd it bought 90 bags at $13,000; and on the 29th it sold 140. The solved card looks like this:
| Date | Detail | Inflows | Outflows | Balance | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Qty | Unit cost | Total | Qty | Unit cost | Total | Qty | Unit cost | Total | ||
| Jan 1 | Opening balance | — | — | — | — | — | — | 80 | 10,000 | 800,000 |
| Jan 5 | Purchase | 120 | 12,000 | 1,440,000 | — | — | — | 200 | 11,200 | 2,240,000 |
| Jan 8 | Sale | — | — | — | 90 | 11,200 | 1,008,000 | 110 | 11,200 | 1,232,000 |
| Jan 12 | Purchase | 150 | 12,500 | 1,875,000 | — | — | — | 260 | 11,950 | 3,107,000 |
| Jan 18 | Sale | — | — | — | 100 | 11,950 | 1,195,000 | 160 | 11,950 | 1,912,000 |
| Jan 22 | Purchase | 90 | 13,000 | 1,170,000 | — | — | — | 250 | 12,328 | 3,082,000 |
| Jan 29 | Sale | — | — | — | 140 | 12,328 | 1,725,920 | 110 | 12,328 | 1,356,080 |
Where every number comes from. In the weighted average method, the unit cost of the balance is recalculated with every purchase: divide the total value available by the units available. Row by row:
- Jan 5: 80 bags of the balance ($800,000) plus 120 purchased ($1,440,000) give 200 bags worth $2,240,000; the average is 2,240,000 ÷ 200 = $11,200.
- Jan 8: the sale of 90 bags goes out at the current average: 90 × 11,200 = $1,008,000. That leaves 110 bags at $11,200 = $1,232,000.
- Jan 12: 150 bags come in at $12,500 ($1,875,000). The balance rises to 260 bags worth $3,107,000 and the average is recalculated: 3,107,000 ÷ 260 = $11,950.
- Jan 18: the sale of 100 bags goes out at $11,950: 100 × 11,950 = $1,195,000. That leaves 160 bags worth $1,912,000.
- Jan 22: with 90 bags at $13,000 ($1,170,000), the balance becomes 250 bags worth $3,082,000 and the average becomes 3,082,000 ÷ 250 = $12,328.
- Jan 29: the sale of 140 bags is valued at $12,328: 140 × 12,328 = $1,725,920. That leaves 110 bags worth $1,356,080.
Results: cost of goods sold = 1,008,000 + 1,195,000 + 1,725,920 = $3,928,920, and ending inventory = 110 bags worth $1,356,080. Notice that no sale is valued at the price of the latest purchase or the first one, but at the average cost of what was available at that moment.
Exercise 2: FIFO kardex, in brief
Now a short FIFO exercise (first in, first out): outflows are valued at the cost of the oldest batches, and only when a batch runs out do you start using the next one. A small garment business recorded the following in January: purchase of 100 units at $15,000 on the 2nd, purchase of 80 units at $16,000 on the 10th, sale of 120 units on the 15th and sale of 40 units on the 20th.
| Date | Detail | Inflows | Outflows | Balance | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Qty | Unit cost | Total | Qty | Unit cost | Total | Qty | Unit cost | Total | ||
| Jan 2 | Purchase | 100 | 15,000 | 1,500,000 | — | — | — | 100 | 15,000 | 1,500,000 |
| Jan 10 | Purchase | 80 | 16,000 | 1,280,000 | — | — | — | 180 | — | 2,780,000 |
| Jan 15 | Sale: 100 units from the Jan 2 batch | — | — | — | 100 | 15,000 | 1,500,000 | 80 | 16,000 | 1,280,000 |
| Jan 15 | Sale: 20 units from the Jan 10 batch | — | — | — | 20 | 16,000 | 320,000 | 60 | 16,000 | 960,000 |
| Jan 20 | Sale | — | — | — | 40 | 16,000 | 640,000 | 20 | 16,000 | 320,000 |
Reading the exercise. After the purchase on the 10th there are two batches: 100 units at $15,000 and 80 at $16,000 (that is why that row's balance shows 180 units worth $2,780,000). The sale on the 15th, of 120 units, comes out of the oldest batch first: the 100 units at $15,000 ($1,500,000) and 20 from the $16,000 batch ($320,000). The sale on the 20th comes entirely from the $16,000 batch: 40 × 16,000 = $640,000.
Results: cost of goods sold = 1,500,000 + 320,000 + 640,000 = $2,460,000, and ending inventory = 20 units of the most recent batch, worth $320,000. That is the practical difference between methods: with rising prices, FIFO usually leaves a higher ending inventory and a lower cost of sales than the weighted average.
Typical mistakes when solving kardex problems
- Mixing methods in the same exercise: valuing some outflows by average and others by FIFO. Choose one method and apply it to every row.
- Not recalculating the average after each purchase: the most frequent failure of the weighted average. The current unit cost is updated with every inflow, not only at month-end.
- Neglecting the balance column: recording the outflow but forgetting to update the balance. Every row must close: previous balance + inflows − outflows, in quantity and value.
- Confusing units with values: for example, subtracting $1,440,000 in a quantity column. Units are operated with units and values with values; they are never mixed.
- Rounding too early: when the unit cost is not exact, work with three or more decimals and round only the final result.
- Solving with data that is not in the problem: assuming selling prices or inventing movements on days with no operations. The kardex is solved only with the movements the problem provides.
How to verify that the results are correct
Before finishing, apply these three checks. If one of them does not match, go through the rows in order until you find the one with the error:
- Units check: ending balance = opening balance + units purchased − units sold. In exercise 1: 80 + 360 − 330 = 110 bags. It matches.
- Value check: ending inventory = opening value + total purchases − cost of goods sold. In exercise 1: 800,000 + 4,485,000 − 3,928,920 = $1,356,080. It matches.
- Unit cost check: in the weighted average, the balance value divided by its units must give the unit cost of the last row: 1,356,080 ÷ 110 = 12,328.
Also check that no balance goes negative in units, because that would mean more was sold than was available. One last practical recommendation: when you validate the real kardex of your business, Kardex Tauro works as a check, because when each purchase is recorded the program automatically generates the kardex movement and updates the average cost with the new inflow. Compare your manual results with those shown by Kardex Tauro and any badly calculated row will show up immediately.