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 @ $128
Mar. 10	Purchase	60 units @ $138
Aug. 30	Purchase	20 units @ $146
Dec. 12	Purchase	70 units @ $152

There are 80 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 Sold
Inventory Method	Merchandise Inventory	Merchandise Sold
First-in, first-out (FIFO)	$	$
Last-in, first-out (LIFO)
Weighted average cost

Answer 1

Solution

	Merchandise inventory	Merchandise Sold
FIFO	$               12,100	$                 16,140
LIFO	$               10,540	$                 17,700
Weighted average	$               11,296	$                 16,944

Working

	Units	Cost per unit	value
Beginning Balance	50	$                 128.00	$ 6,400
Purchases
	60	$                 138.00	$ 8,280
	20	$                 146.00	$ 2,920
	70	$                 152.00	$ 10,640
Total	200		$ 28,240

.

Average Cost of Inventory
Units	(A)	200
Total Cost	(B)	$ 28,240
Average Cost	(C=B/A)	$                 141.20

.

FIFO
Total Units Available for sale		200
Units Sold		120
Closing Stock in Units		80
Valuation
Ending Inventory	70	@	$           152.00	$ 10,640
	10	@	$           146.00	$ 1,460
Value Of Ending Inventory				$            12,100
Cost of Goods sold				$            16,140
LIFO
Total Units Available for sale		200
Units Sold		120
Closing Stock in Units		80
Valuation
Ending Inventory	50	@	$           128.00	$ 6,400
	30	@	$           138.00	$ 4,140
Value Of Ending Inventory				$            10,540
Cost of Goods sold				$            17,700
Weighted Average method
Total Units Available for sale		200
Units Sold		120
Closing Stock in Units		80
Valuation
Ending Inventory	80	@	$        141.200	$            11,296
Value Of Ending Inventory				$            11,296
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$            16,944