Question

Consider the following information for Maynor Company, which uses a perpetual inventory system:

	Transaction	Units		Unit Cost			Total Cost
January 1	Beginning Inventory	26		$	76		$	1,976
March 28	Purchase	36			82			2,952
August 22	Purchase	52			86			4,472
October 14	Purchase	57			92			5,244
Goods Available for Sale		171					$	14,644

The company sold 57 units on May 1 and 52 units on October 28.

Required:

Calculate the company's ending inventory and cost of goods sold using the each of following inventory costing methods.

1. FIFO
2. LIFO
3. Weighted Average

Answer 1

a)Under FIFO, units acquired first are sold first.

	Purchase			cost of goods sold			Ending inventory
	unit	unit cost	Total	unit	unit cost	Total	unit	unit cost	Total
Jan 1							26	76	1976
Mar 28	36	82	2952				26	76	1976
							36	82	2952
May 1				26	76	1976
				31	82	2542	36-31=5	82	410
Aug 22	52	86	4472				5	82	410
							52	86	4472
Oct 14	57	92	5244				5	82	410
							52	86	4472
							57	92	5244
Oct 28				5	82	410	52-47=5	86	430
				47	86	4042	57	92	5244
Total						8970

cost of goods sold : 8970

Ending inventory : 430+5244= 5674

b)LIFO :under LIFO ,units acquired last are sold first.

	Purchase			cost of goods sold			Ending inventory
	unit	unit cost	Total	unit	unit cost	Total	unit	unit cost	Total
Jan 1							26	76	1976
Mar 28	36	82	2952				26	76	1976
							36	82	2952
May 1				36	82	2952
				21	76	1596	26-21=5	76	380
Aug 22	52	86	4472				5	76	380
							52	86	4472
Oct 14	57	92	5244				5	76	380
							52	86	4472
							57	92	5244
Oct 28				52	92	4784	5	76	380
							52	86	4472
							57-52=5	92	460
Total						9332

cost of goods sold:9332

ending inventory : 380+4472+460= 5312

3)weighted average :under weighted average ,units are sold at average cost calculated at time of each purchase.

	Purchase			cost of goods sold			Ending inventory
	unit	unit cost	Total	unit	unit cost	Total	unit	unit cost	Total
Jan 1							26	76	1976
Mar 28	36	82	2952				26+36=62	[1976+2952]/62=79.48	4928
May 1				57	79.48	4530	62-57=5	79.48	398
Aug 22	52	86	4472				5+52=57	[398+4472]/57=85.44	4870
Oct 14	57	92	5244				57+57=114	[4870+5244]/114=88.72	10114
Oct 28				52	88.72	4613	114-52= 62	88.72	5501
Total						9143

cost of goods sold :9143

ending inventory : 5501