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Periodic Inventory Methods/Valuation Hyper Company had a beginning inventory on January 1 of 160 units of Product 4-18-19 at a cost of $20 per unit. During the year, the following purchases were made.

Mar. 15 400 units at $23

Sept. 4 330 units at $26

July 20 250 units at $24

Dec. 2 100 units at $29

1,000 units were sold.

Hyper Company uses a periodic inventory system. Instructions

(a) Determine the cost of goods available for sale.

(b) Determine (1) the ending inventory, and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (c) Which cost flow method results in (1) the highest inventory amount for the balance sheet, and (2) the highest cost of goods sold for the income statement?

Answer 1

a) Calculate cost of goods available for sale

	Unit	Unit cost	Total Cost
Beginning inventory	160	20	3200
Purchase Mar 15	400	23	9200
Purchase Sept 4	330	26	8580
Purchase July 20	250	24	6000
Purchase Dec 2	100	29	2900
Total	1240		29880

Cost of goods available for Sales = $29880

2) Calculate following

	FIFO	LIFO	Average cost
Ending inventory	(100*29+140*24) = 6260	(160*20+80*23) = 5040	29880/1240*240 = 5783
Cost of goods sold	29880-6260 = 23620	29880-5040 = 24840	29880-5783 = 24097

c) Highest Inventory amount = FIFO = $6260

d) Highes cost of goods sold = LIFO = $24840