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Periodic Inventory by Three Methods:Cost of Merchandise Sold The units of an tem available for sale during the year were as follows Jan. 1 Inventory Mar. 10 Purchase Aug. 30 Purchase Dec. 12 Purchase There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is us Determine the inventory cost and the cost of merchandise sold by three methods. Round i 40 units @ $98 70 units @ $110 З0 units @ $114 60 units @ $116 ed 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

Cost of goods available for sale

Date	Explanation	Units	Unit cost	Total cost
Jan. 1	Beginning inventory	40	$98	3,920
March 10	Purchase	70	$110	7,700
Aug. 30	Purchase	30	$114	3,420
Dec. 12	Purchase	60	$116	6,960
	Total	200		$22,000

FIFO Method

Step 1. Ending inventory

Date	Units	Unit cost	Total cost
Aug. 30	20	$114	$2,280
Dec.12	60	$116	$6,960
	80		$9,240

Step 2. Cost of goods sold

Cost of goods available for sale    $22,000

Less: Ending inventory                   - $9,240

Cost of goods sold                           $12,760

LIFO Method

Step 1. Ending inventory

Date	Units	Unit cost	Total cost
Jan. 1	40	$98	$3,920
March 10	40	$110	$4,400
	80		$8,320

Step 2. Cost of goods sold

Cost of goods available for sale    $22,000

Less: Ending inventory                   - $8,320

Cost of goods sold                           $13,680

Weighted Average cost method

Step 1. Ending inventory

Weighted average unit cost = Cost of goods available for sale/Total units available for sale

= 22,000/200

= $110

Ending inventory = 80 x 110

            = $8,800

Step 2. Cost of goods sold

Cost of goods available for sale    $22,000

Less: Ending inventory                   - $8,800

Cost of goods sold                           $13,200

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