Question

periodic inventory system merchandise inven LO2 • P6-2A. Inventory Costing Methods-Periodic Method Tally Stores uses the periodic inventory for its merchandise inventory. The April 1 inventory for one of the items in the merchandise tory consisted of 120 units with a unit cost of $330. Transactions for this item during April follows: April 9 Purchased 40 units @ $345 per unit. 14 Sold 80 units @ $550 per unit. 23 Purchased 20 units @ $360 per unit. 29 Sold 40 units @ $550 per unit. Required a. Calculate the cost of goods sold and the ending inventory cost for the month of April using the weighted average cost method. Round the cost per unit to 3 decimal places and your final an- swers to the nearest dollar. b. Calculate the cost of goods sold and the ending inventory cost for the month of April using the first-in, first-out method. c. Calculate the cost of goods sold and the ending inventory cost for the month of April using the last-in, first-out method.

Answer 1

(a) Weighted Average :-

	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic			Ending Inventory-Periodic
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold	# of units	Cost pu	Ending Inventory
Beginning Inventory	120	$330	$39600	120      $336.667   $40400			60         $336.667          $20200
Purchases:-
April 9	40	$345	$13800
April 23	20	$360	$7200
Total	180		$60600	120		$40400	60		$20200

Avg cost per unit = Total cost available for sale/No of units available for sale

     = $60600/180 = $336.667

Cost of Goods sold = $40400

Ending Inventory = $20200

(b) Periodic FIFO :-

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic FIFO			Ending Inventory-Periodic FIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic FIFO	# of units	Cost pu	Ending Inventory-Periodic FIFO
Beginning Inventory	120	$330	$39600	120	$330	$39600	-	6	-
Purchases:-
April 9	40	$345	$13800				40	$345	$13800
April 23	20	$360	$7200				20	$360	$7200
Total	180		$60600	120		$39600	60		$21000

Cost of Goods sold = $39600

Ending Inventory = $21000

(c) Periodic LIFO :-

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold-Periodic LIFO			Ending Inventory-Periodic LIFO
	# of units	Cost pu	Cost of Goods Available for Sale	# of units	Cost pu	Cost of Goods Sold-Periodic LIFO	# of units	Cost pu	Ending Inventory-Periodic LIFO
Beginning Inventory	120	$330	$39600	60	$330	$19800	60	$330	$19800
Purchases:-
April 9	40	$345	$13800	40	$345	$13800
April 23	20	$360	$7200	20	$360	$7200
Total	180		$60600	120		$40800	60		$19800

Cost of Goods sold = $40800

Ending Inventory = $19800