Question

Periodic inventory by three methods; cost of goods sold

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

Jan. 1	Inventory	180	units at $108
Mar. 10	Purchase	224	units at $110
Aug. 30	Purchase	200	units at $116
Dec. 12	Purchase	196	units at $120

There are 208 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods.

Cost of Inventory and Cost of Goods Sold
Inventory Method	Ending Inventory	Cost of Goods Sold
First-in, first-out (FIFO)	$	$
Last-in, first-out (LIFO)
Weighted average cost

Answer 1

a. FIFO Method

	Units	Rate	Amount
Sale from beginning inventory	180	$   108	$   19,440
Sale from March 10 purchase	224	$   110	$   24,640
Sale from August 30 purchase	188	$   116	$   21,808
Cost of goods sold	592		$   65,888

	Units	Rate	Amount
Balance from Aug 30 purchase	12	$   116	$     1,392
Balance from Dec 12 purchase	196	$   120	$   23,520
Ending inventory	208		$   24,912

b. LIFO Method

	Units	Rate	Amount
Sale from Dec 12 purchase	196	$   120	$   23,520
Sale from Aug 30 purchase	200	$   116	$   23,200
Sale from Mar 10 purchase	196	$   110	$   21,560
Cost of goods sold	592		$   68,280

	Units	Rate	Amount
Balance from Mar 10 purchase	28	$   110	$     3,080
Balance from Beginning inventory	180	$   108	$   19,440
Ending inventory	208		$   22,520

c. Average cost method

	Units	Rate	Amount
Beginning inventory	180	$   108	$   19,440
March 10 purchases	224	$   110	$   24,640
August 30 purchases	200	$   116	$   23,200
Dec 12 Purchase	196	$   120	$   23,520
Number and cost of goods available for sale	800		$   90,800

Number of units available for sale	800
Cost of goods available for sale	$   90,800
Weighted average cost per unit ($90,800/800)	$   113.50

Cost of goods sold = 592*$113.5

Cost of goods sold = $67,192

Ending inventory = 208*$113.5

Ending inventory = $23,608

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Answer 2