Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	50 units @ $106
Mar. 10	Purchase	70 units @ $114
Aug. 30	Purchase	30 units @ $122
Dec. 12	Purchase	50 units @ $128

There are 60 units of the item in the physical inventory at December 31. The periodic inventory system is used.

Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar.

Cost of Merchandise Inventory and Cost of Merchandise SoldInventory MethodMerchandise InventoryMerchandise SoldFirst-in, first-out (FIFO)$$Last-in, first-out (LIFO)Weighted average cost

Answer 1

Correct Answer:

	FIFO	LIFO	Weighted Average
Cost of Goods Sold	$                  15,720	$                  16,900	$                             476
Ending Inventory	$                     7,620	$                     6,440	$                       22,864

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	50	$                     106.0	$                     5,300.0
Purchases	70	$                     114.0	$                     7,980.0
Purchases	30	$                     122.0	$                   3,660.00
Purchases	50	$                     128.0	$                     6,400.0
Total	200		$                       23,340

Weighted Average Cost Per unit
Units		(A)	200
Total Cost		(B)	$            23,340.00
Average Cost		(C=B/A)	$                116.700

	FIFO
A	Total Units Available for sale			200		$               23,340
	Units Sold			140
	Ending Inventory Units			60
	Valuation
	Cost of Goods Sold		50		$                       106.00	$            5,300.00
			70		$                       114.00	$                  7,980
			20		$                       122.00	$            2,440.00
B	Cost of Goods Sold		140	units		$               15,720
A-B	Ending Inventory		60	units		$              7,620.0

	LIFO
A	Total Units Available for sale			200		$               23,340
	Units Sold			140
	Ending Inventory Units			60
	Valuation
	Cost of Goods Sold		50		$                       128.00	6,400.00
			30		$                       122.00	3,660.00
			60		$                       114.00	6,840.00
B	Cost of Goods Sold		140	units		$         16,900.00
A-B	Ending Inventory		60	units		$            6,440.00

	Weighted Average
A	Total Units Available for sale			200		$         23,340.00
	Units Sold			140
	Ending Inventory Units			60
	Valuation
	Cost of Goods Sold		140		$                         3.400	$               476.00
B	Cost of Goods Sold		140	units		$               476.00
A-B	Ending Inventory		60	units		$         22,864.00

End of answer.

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